Railways: Driver-only Trains

Lord Berkeley: asked Her Majesty's Government:
	How considerations of passenger safety and security and cost influenced their decision not to include an option for driver-only operation in the new South West Trains franchise inquiry.

Lord Davies of Oldham: My Lords, the South Western franchise does not contain an option for driver-only operation. Bidders have been asked to submit proposals that meet the franchise objectives, and the Government expect the market to determine the most appropriate method for achieving these goals. Should bidders recommend changes to current operational practices, they must demonstrate that the proposal represents value for money and ensure that passenger safety and security is not compromised.

Lord Berkeley: My Lords, I am very grateful to my noble friend for that Answer, but he will be aware that more than 800 guards are employed on South West trains and many of them are sitting in their cabs doing absolutely nothing to help passenger security. I know that my noble friend is very concerned about that, especially in the inner suburban areas. Would it not be good to get those guards patrolling up and down the coaches to give passengers more of an element of security—and perhaps to save a little bit of money, if you do not need a guard on every train?

Lord Davies of Oldham: My Lords, those are obviously factors that the bidders for the franchise will take into account. They will want to run their trains in the most economic way to provide the best service and to position themselves best for the bid, but they will also be aware of the fact that we are concerned for the security of passengers and train staff on the railway, so they will take that point into account, too.

Lord Bradshaw: My Lords, is not the Minister being a little disingenuous? The franchisees are bidding by means of a specification to submit the most competitive bids to the Government. The Government, in their specification, apparently do not go for the efficient option of driver-only operation, but neither do they specify that stations should have adequate staff at night to secure the safety of passengers. So the bids come in at the lowest possible price, security and economy are not achieved, and the Government blame the franchisees. Is it not the Government's fault?

Lord Davies of Oldham: My Lords, franchisees know the basis on which the franchise will be awarded. Of course, the Government ensure in the criteria for the franchise that value for money is achieved, but also the security of the railway and its effective operation. It would be very odd if we identified one particular issue of railway management and put that into the franchise requirement. The noble Lord, Lord Bradshaw, would just pick on another specification that he thought should be in there and we would have a franchise that would be extraordinarily detailed and specific and not give franchisees an appropriate way in which to approach the issue.

Lord Faulkner of Worcester: My Lords, does my noble friend agree that one ingredient which must be in the new franchise for South West Trains is the creation of facilities to allow people to use the Oyster card so that they can interchange between the London Underground and the mainline at places such as Richmond and Wimbledon? Does he not agree that the way in which South West Trains has hitherto dragged its feet on the introduction of the Oyster card is causing great unhappiness among passengers and that this must be put right in the new franchise?

Lord Davies of Oldham: My Lords, my noble friend makes a constructive point. He will know that there is considerable pressure, not least from those concerned with passenger facilities in the London area, that the Oyster card should have wider currency. Certainly that would facilitate the movement of travellers coming into London from the south-west and, indeed, from other parts. We all recognise that the Oyster card brings potential benefits in operating efficiency, but, of course, the train companies have to sign up to it.

Baroness Hanham: My Lords, before undertaking or looking again at railway franchises, have the Government undertaken any research on the safety of driver-only trains in comparison with trains with guards who are able to wander up and down, and on passenger reaction to driver-only trains?

Lord Davies of Oldham: My Lords, I thought that question would be appropriately asked. I have asked for a full briefing on the matter. No serious incident or major security factor has been related to driver-only trains. However, passengers' feelings regarding security may be a slightly different matter. Noble Lords will recognise that railway staff, even when mobile on a train, are not expected to intervene in very distressing circumstances of real difficulty with passengers. There is a limit on what they are expected to do. Therefore, I do not think that passengers are more anxious on driver-only trains. Certainly, no incident has occurred that should increase that insecurity.

Passports: Interviews

Lord Roberts of Llandudno: asked Her Majesty's Government:
	Whether the 69 new passport interview offices will be fully operational by the deadline of the last quarter of 2006.

Baroness Scotland of Asthal: My Lords, preparations are well in hand to begin interviews late this year. We want to introduce them as soon as is practicable because of the improvement in confirming identity and fighting passport fraud they will bring, but there is no deadline. It is very important to minimise any risk to the smooth running of passport issuing. Therefore, the new offices will be brought into operation in a controlled phased programme over about three months.

Lord Roberts of Llandudno: My Lords, I thank the Minister for her Answer although I am surprised that the last quarter deadline is not being adhered to. Many of us are concerned about continual bureaucracy and erosion of civil liberties. First, what will be recorded at personal interviews at the 69 new offices—will it be fingerprints or iris scans? Secondly, will the Minister please inform us of the addresses of the 69 new offices, their staffing and the costs? And—

Noble Lords: Oh!

Lord Roberts of Llandudno: This is part of my second question, with your Lordships' indulgence. Given the location of the new offices, many people will have to travel great distances. Will any assistance be given to those needing to travel from, say, the Isle of Lewis to Aberdeen or from Aberdaron to Wrexham?

Baroness Scotland of Asthal: My Lords, I hope that the noble Lord will be pleased to hear that the locations have all been identified. The roll-out will take place by January/February so there has not been great slippage. Fingerprints and iris recognition will not form part of the interview process. Noble Lords will be aware that the whole issue of facial recognition is ongoing. The addresses of the 69 offices are available. They have been provided. Indeed, I have a map that I am sure the noble Lord would love to see. I hope that I had given great delight to him today.

Lord Dholakia: My Lords, has the Minister taken into account the need for additional resources to deal with applicants who may apply for passports in anticipation of ID cards being introduced soon?

Baroness Scotland of Asthal: My Lords, we have a clear understanding of the sorts of applications that are likely to be made. We have made appropriate provision. We will still have the check-and-send service that noble Lords will know is available from post offices across the country, so we will be able to check the biographical footprint first. The processes that we are now adopting will be appropriate and speedy. No applicant should have to travel for more than about one hour. If they do, special provisions will be made available for remote communities. All the planning is well in place.

Lord Forsyth of Drumlean: My Lords, when the Government carried out a cost benefit analysis of their proposals, what was their estimate of the additional costs that would be imposed on people who wish to have a passport?

Baroness Scotland of Asthal: My Lords, we produced an estimate of the costs of this new service last year. Noble Lords will know that that has been included in the estimates. The current programme of face-to-face recognition will enable us to take advantage of a more secure process to help with fraud. Those issues were canvassed long before our debates on identity cards.

Lord Mackenzie of Framwellgate: My Lords, does my noble friend agree that as evidence suggests terrorists tend to use multiple passports, the use of biometric passports, which is a European requirement—in some senses, an international one—should reduce that use dramatically?

Baroness Scotland of Asthal: My Lords, I agree with my noble friend. Passport interviews are fully justified by the need to tackle identity fraud through attempts to obtain passports in false or stolen identities. That is the main use we found where the difficulty lies. Passports containing a facial biometric are necessary to meet international standards, as my noble friend has indicated. In due course, as we have discussed, fingerprint records in British passports will be needed to keep up with the security standards of passports issued by other EU member states.

Lord Crickhowell: My Lords, will the Minister place in the Library, if she has not already done so, the map that is giving her so much pleasure?

Baroness Scotland of Asthal: My Lords, I should be delighted to do so. I have a funny feeling that it might already be there, but if not, rest assured that it will be.

The Countess of Mar: My Lords, will the Minister tell the House which computer company has the contract for connecting all the 69 offices? Is it the same company that provides computer services to the National Health Service?

Baroness Scotland of Asthal: My Lords, the company that has succeeded is Mapeley. I think that it is a different company. The contract was put out to proper tender, which it won on a competitive basis.

Baroness Seccombe: My Lords, the Minister seems to be setting great store on facial recognition. I have an example concerning the parents of young twins. A passport application has to be made for each twin at a cost of £50 each, and this very morning, a photograph of one of the twins was returned because the child's mouth was open. Can the Minister help the House by explaining how one can get a child of that age to keep its mouth closed?

Baroness Scotland of Asthal: My Lords, if any of us knew that we would be very wealthy indeed. In introducing biometric photographs, we will be able to check that the photograph taken meets the required standard. That will make the process easier. The wonderful thing about a digital photograph is that we can keep it still until just the right moment so that the image can be captured correctly.

Lord Roberts of Conwy: My Lords, will it be possible to obtain a passport from now on without an interview?

Baroness Scotland of Asthal: My Lords, it may be because of the roll-out process. We are trying to have face-to-face interviews in relation to new passports. We shall be doing that on a regional basis, and an opportunity will be given to all those obtaining new passports. That will happen on the reissue of passports as fingerprints and other requirements come in. That will be rolled out, but we are talking about the first issue of passports at the moment.

Lord Dixon-Smith: My Lords, will the noble Baroness give an assurance that the computer company running the identity cards contract is not the same as that running the computers for the Rural Payments Agency?

Baroness Scotland of Asthal: My Lords, we will issue all contracts with the greatest of care and make sure that the best possible supplier is chosen to meet the needs.

Lord Roberts of Llandudno: My Lords, if the irises and fingerprints are not to be recorded, why does it say on the United Kingdom Passport Service internet site that,
	"the public will be able to have their irises and fingerprints recorded"?
	Why does it say that if the Minister is contradicting it?

Baroness Scotland of Asthal: My Lords, people will be able to have irises and fingerprints recorded in due course. We have already identified what the roll-out programme will be and indicated that it is unlikely to take place before 2008. First, it will be the biometric photograph. Subsequently, noble Lords should also know that the offices that we have identified for the face-to-face interviews are likely to be similar to those taking fingerprints in due course, when that falls to be considered.

Energy: Nuclear

Lord Howell of Guildford: asked Her Majesty's Government:
	What is their response to the new guidelines being proposed for the supply of sensitive nuclear materials by the Nuclear Suppliers Group.

Baroness Royall of Blaisdon: My Lords, Her Majesty's Government warmly welcomed the US-India civil nuclear co-operation initiative and subsequent proposal for an exemption to the Nuclear Suppliers Group guidelines, which would allow nuclear transfers to IAEA-safeguarded civil nuclear facilities in India. We believe that it will allow for a significant contribution to energy security, development, economic and environmental objectives for India and the international community. It represents a gain for the nuclear non-proliferation regime, which is underpinned by the non-proliferation treaty.

Lord Howell of Guildford: My Lords, I am grateful to the noble Baroness for her reply and glad that she warmly welcomes the US-India deal. Does she agree that, since India is not even a signatory to the non-proliferation treaty, the supply of new nuclear materials to it raises some important questions for the whole non-proliferation regime and, possibly, about the India-Pakistan nuclear balance? In the light of the new realities—including Israeli ownership of nuclear weapons and the dangerous pretensions of both Iran and, even more so, North Korea—is it the Government's view that the time has come to look at an enlargement and strengthening of the NPT regime, to take account of the realities that the world now faces?

Baroness Royall of Blaisdon: My Lords, the NPT continues to be the cornerstone of our nuclear disarmament work; it is under constant review. Clearly, as the noble Lord says, the new development—the potential agreement between India and the US—raises important issues. It is something that the UK will continue to monitor, together with our NPT partners, and I am sure it will develop accordingly.

Lord Redesdale: My Lords, can the Minister say whether the Government are having talks with the Russian authorities about their distribution of nuclear materials? It was, of course, the Russian deal with India that led to the setting-up of the NPT regime in the first place.

Baroness Royall of Blaisdon: Yes, my Lords, the UK is having dialogue with the Russian authorities about nuclear issues, both within Russia and globally. Noble Lords may indeed be interested to note that Russia has been very supportive of the new agreement between India and the US.

Lord Hannay of Chiswick: My Lords, does the Minister not feel that, with the non-proliferation treaty regime under considerable strain, it is a rather odd moment to reward—by relaxing the guidelines—a country which has never accepted the disciplines of that treaty? Would she not think it better to reward those who have accepted those disciplines by ensuring an internationally guaranteed supply of low-enriched uranium for their civil nuclear plants?

Baroness Royall of Blaisdon: My Lords, this is an important, strategic time in our discussions with India. It is not, as such, a reward for India; it is a development of our policy towards India, which we and many of our partners believe will have very many important international repercussions. We believe that this is a good time to grasp the nettle of negotiations with India, but that does not mean that we are diminishing in any way our intentions to achieve agreement with our other partners on elements of the nuclear non-proliferation treaty.

Lord Archer of Sandwell: My Lords, if the nuclear weapon states complied with their obligations under the treaty, which were repeated two years ago, would that not be an important contribution to solving the problem? Would that not be a very useful lead in encouraging other powers to comply with the treaty?

Baroness Royall of Blaisdon: My Lords, indeed that would be a very important element, but we believe that we must grasp every opportunity that we can to ensure that the nuclear non-proliferation treaty goes forward. At the moment, supporting the discussion and the proposal between India and the US is an element, but that does not mean that we should not pursue all those other avenues at the same time.

Baroness Park of Monmouth: My Lords, does the Minister agree that despite the assurances of the Russians now, it was the Russians who gave India the cryogenic rocket motors, despite their promises not to do so some years ago? I hope that the Government will be wary of any Russian assurances on this issue.

Baroness Royall of Blaisdon: Yes, my Lords, the noble Baroness is absolutely correct. It is important to be vigilant in our discussions not only with Russia but also with our other partners. We shall continue to be vigilant on that matter.

Lord Berkeley: My Lords, I risk asking my noble friend a rather naive question. Perhaps she could put herself in the situation of Iran, which is surrounded by new nuclear countries such as Israel, Pakistan and India. Would she not agree that an Iranian Government might think it reasonable for them to develop their nuclear facilities to balance the countries by which they are surrounded?

Baroness Royall of Blaisdon: My Lords, it is not credible to compare India with Iran, although I understand where the noble Lord is coming from. While Iran is violating its existing IAEA obligations, India will be making new ones by allowing the IAEA oversight of parts of the Indian programme and seeking peaceful international co-operation.

Baroness Williams of Crosby: My Lords, does the Minister agree that while undoubtedly India is a very close friend of this country, and one that many of us admire, it is a rather unfortunate lesson for other countries to learn that there are rewards for those who do not accept the existing international regime to control nuclear proliferation? Can she bear in mind that the repercussions for countries like Iran of applauding and approving the kind of development that we have just seen between the United States and India can be extremely serious?

Baroness Royall of Blaisdon: My Lords, Her Majesty's Government are aware of the importance of the repercussions, as the noble Baroness puts it. However, I must emphasise that the potential agreement between the US and India—and whether there is agreement within the Nuclear Suppliers Group—is not just a bilateral agreement. It would have to be agreed by all members of the Nuclear Suppliers Group. Therefore, it is not just the UK taking a position on this; it will be an internationally agreed solution to a problem, and I believe we are going about it in the correct way.

Lord Wallace of Saltaire: My Lords, given the nuclear special relationship between the United Kingdom and the United States, can the Minister assure us that the United States consulted the British fully before the bilateral offer was made to India, or were we merely informed afterwards?

Baroness Royall of Blaisdon: My Lords, the UK has been in constant dialogue with the United States on this issue, but so have France and Russia. It is not solely a matter of discussions between the UK and the US. We are engaged in a multilateral decision-making process.

Housing: Home Information Packs

Baroness Gardner of Parkes: asked Her Majesty's Government:
	What progress has been made on the introduction of housing information packs; and whether, prior to their introduction for all home sales, there will be a full assessment of their effectiveness and benefits based on the results of the pilot scheme.

Baroness Andrews: My Lords, a timeline showing the key events and milestones leading to the introduction of home information packs on 1 June 2007 was published on 7 April. We have made it clear that all aspects of the pack need to be tried and tested through a dry run before the mandatory scheme is introduced. That will include an evaluation of each of the three phases of the dry run.

Baroness Gardner of Parkes: My Lords, I thank the Minister for that Answer. Exactly how many inspectors—that is those people with a special qualification to issue the home information pack—are to be trained? How many have been trained? If the numbers trained are just right for when the housing market is booming, what else will these people be able to do when the housing market is quiet?

Baroness Andrews: My Lords, at the moment about 4,000 home inspectors are already trained or are being trained, which is a good figure. The last time I reported to the House, before Christmas, the figure was 1,750. When we published the timeline and the date for implementation, people started coming forward in great numbers, particularly chartered surveyors. We are monitoring the situation, and we are confident that we can meet the required numbers, which are probably of the order of 7,000. We have reviewed that with our stakeholders recently, and we thought that the number should be in the range of 5,000 to 7,000. What will they do? I am sure that once they are established they will be more than occupied.

Baroness Sharples: My Lords, what will be the cost?

Baroness Andrews: My Lords, each training course costs about £2,000, which is borne by the people choosing to train. The majority coming forward are chartered surveyors; behind them is a cohort of people with qualifications, for example, as estate agents. However, some people will choose to develop it as a new profession, and that will take a little more time.

Lord Campbell-Savours: My Lords, what is happening with building society acceptance of the survey report?

Baroness Andrews: My Lords, that is an important question. It is very important that this new procedure, which will make the business of buying and selling so much fairer and easier, particularly for first-time buyers, is understood by the consumer. The consumer organisations pressed us to do this. We have already started a campaign of talking to the stakeholders. A website has been established, and information is going out. As we move through the year, that campaign will be concentrated on consumers, with media advertisements and information to make sure that they have the fullest, most complete and most helpful information available.

Baroness Scott of Needham Market: My Lords, is the Minister aware that the Council of Mortgage Lenders has said that the ODPM has not done enough to assess the impact on the market that the home information packs will have? Does she not think that with a year to go that is something of a glaring oversight?

Baroness Andrews: My Lords, we have talked to stakeholders about how they think the market will react. There is no sense that there will be any massive disruptions. We are going to undertake a detailed market study in June and will monitor it in 18 months' time. As I said, we are discussing possible impacts with stakeholders. We expect the packs to have a very positive effect overall, because of the improvement that they will make to the business of buying and selling.

Lord Phillips of Sudbury: My Lords, if the Government discover, when they analyse the results of the pilot scheme, that this scheme will, all in all, substantially increase the costs of transferring properties, confirming the predictions that are currently being made, will they be prepared to abandon the scheme?

Baroness Andrews: My Lords, the notion that this will increase costs is not in line with what we, stakeholders or consumers believe. There are no new costs. There is a redistribution of costs from the buyer to the seller, but people like first-time buyers will get the pack for free. Most sellers are buyers and will benefit in that way. In the course of the dry run, we are going to look at all aspects, from all points of view of all stakeholders, and we will make sure that we get continuous, iterative feedback. We will ensure that any changes that are sensible and necessary will be made.

Lord Forsyth of Drumlean: My Lords, on new costs, is the answer to the question that the noble Lord, Lord Campbell-Savours, asked not crucial? What is the position on building societies accepting the survey reports?

Baroness Andrews: My Lords, the Council of Mortgage Lenders has worked very closely with us at each stage. It is very important that we are on-side with them. We have never denied that there will be a need for a valuation, because valuations, particularly for higher loans, are important. We have said that the home condition report, with its solid information in an electronic format, with new ratings and an energy certificate, will make it easier for mortgage lenders to do the sorts of surveys that do not always require a site visit but can be done from the desktop or drive-by, which they are increasingly doing. That will make the business of evaluation swifter and, we hope, less costly.

Lord Alton of Liverpool: My Lords, has the Minister seen the suggestion in today's newspapers that the cost of housing is likely to double again in the next decade? What hope does she hold out for first-time buyers, especially young people, who are desperately trying to get onto the home ownership ladder?

Baroness Andrews: My Lords, the first-time buyer is obviously in the most vulnerable position in the market. With 30 per cent of transactions falling through, we are wasting £1 million a day. First-time buyers are right in the line for that. Having a system that enables them to discover the condition of the house that they are buying—not down the line, but right up front—will help them a lot. In our plans for expanding home building, we have in mind the first-time buyer—the 30 year-old who will not be able to afford to buy a house in five years' time unless we address those market inequalities.

Baroness Hanham: My Lords, in the Minister's experience so far, who is drawing the packs together? Is it the estate agents who are trying to sell the house, or the legal advisers or solicitors involved in the sale or purchase? If it is independent bodies, who are they? Do they all charge fees?

Baroness Andrews: My Lords, the home information pack providers—essentially the estate agents—will be responsible for bringing the packs together, and there is currently an association set up to provide that. Of course, it is an objective and legal document, so it will be done to the highest standards. That is why we have built in a robust certification process, which will be coming into effect in October.

Animal Welfare Bill

Baroness Farrington of Ribbleton: My Lords, I beg to move the Motion standing in the name of my noble friend Lord Bach on the Order Paper.
	Moved, That the Bill be committed to a Grand Committee.—(Baroness Farrington of Ribbleton.).

On Question, Motion agreed to.

Procedure of the House: Select Committee Report

Lord Brabazon of Tara: My Lords, I beg to move the Motion standing in my name on the Order Paper. This report is mainly concerned with the Speakership of the House, and I will say a few words about that important matter. The report implements the House's decision, on 31 January this year, to approve the report of the second Select Committee on the Speakership, chaired by the noble and learned Lord, Lord Lloyd of Berwick. It covers two main issues.
	First, on the process of election, your Lordships will see that what we propose follows very closely the now-familiar process for by-elections involving the whole House. The main difference is that candidates will require a proposer and a seconder. I should draw attention to the proposed timetable: polling day on Wednesday 28 June, with the result announced on Tuesday 4 July.
	Secondly, on the central issue of the Speaker's role in the Chamber, the Committee has done no more than to set out in the language of the Companion what the Select Committee recommended. In the proposed text on page 6 of the report, I draw attention to paragraph 2:
	"The Speaker has no power to act in the House without the consent of the House".
	This is based on Standing Order 19, which the Select Committee recommended should be repealed. It makes it as clear as possible that the change in our Speakership will have no effect on self-regulation.
	The report also deals with the Speaker's role in Private Notice Questions. As it says, the House has already decided, on the basis of the Lloyd report, that the preliminary decision to allow a PNQ will be taken by the Speaker rather than the Leader. I beg to move.

Moved, That the 3rd Report from the Select Committee be agreed to.—(The Chairman of Committees.)

Lord Cope of Berkeley: My Lords, I repeat that we regret that the Lord Chancellor of the day will no longer preside—indeed, not even this afternoon—over your Lordships' House. It is entirely at his own request, however, and not our wish that that should happen. In this country we have never yet believed in the absolute separation of powers, otherwise Ministers would not sit in this House at all. We believe in accountability instead.
	However, the noble and learned Lord is not going to sit on the Woolsack and we are told that his successor may not be a Member of this House. So we must make alternative arrangements. We will have to have a number of debates over the next few weeks on various aspects of the change. Today's report deals with the least controversial matters and we support the Procedure Committee's recommendations.
	The electoral arrangements are similar to those that have operated satisfactorily for recent elections of hereditary Peers, as the Chairman of Committees has set out.
	The changes proposed to the Standing Orders and the Companion reflect decisions your Lordships' House has already made about the future role of the Lord Speaker and follow the recommendations of the Selection Committee.
	As the noble Lord has just said, the position remains that, in future, the Lord Speaker on the Woolsack will do nothing without the consent of the House. Up until now this has been laid down both in Standing Order 19—to which the noble Lord referred—and is spelt out more fully in the Companion in paragraph 4.01.
	The Procedure Committee report does not refer specifically to Standing Order 19 but we regret its disappearance. It would be best to retain the Standing Order, suitably altered. But in any case the crucial paragraph 4.01 will remain in the Companion, as well as the new passage from the Procedure Committee report. So it will be very clear that the House remains self-regulating.
	The other proposal in the report is about introductions. The current arrangements do not allow introductions on Thursdays and that reflects our former practice of meeting at 3 pm on Thursdays. Now that we meet at 3 pm on Wednesdays and 11 am on Thursdays, it looks right to swap those two days over. Introductions will now take place normally on Mondays, Tuesdays and Thursdays and not normally on Wednesdays. Now that we are—at last—to have some more introductions, this change is timely.
	I commend the Procedure Committee report to the House.

Lord Trefgarne: My Lords, I do not intend to make a long speech.
	I had the privilege of being a member of the two committees chaired by the noble and learned Lord, Lord Lloyd of Berwick. Like many noble Lords, I am reluctant to find us making the change that is proposed but that is what the House has decided and that is that.
	Like my noble friend Lord Cope, I welcome the fact that the House is to remain self-regulating. That has been agreed and it is a very good thing.
	I welcome the change to Private Notice Questions—a small matter at the end of the Procedure Committee report. There was much discussion on that matter in the Select Committee and it is a useful change.
	I would like to see many more Private Notice Questions in your Lordships' House. They are very rare and generally occur only when a similar Question is being taken in the other place. I cannot remember the last time that a Private Notice Question unique to this House was accepted by the Leader of the day and duly asked and answered. I plan to table one or two once the new arrangements are in place. Let us hope that they become more frequent.
	Like my noble friend, I broadly accept what is proposed and hope that the House will do likewise.

Lord Brabazon of Tara: My Lords, I am grateful to both noble Lords who have spoken for their general acceptance of the report.
	Both the noble Lords, Lord Cope and Lord Trefgarne, not unnaturally regret the departure of the Lord Chancellor but, sadly, that is something that we have to get used to. It has been decided by the House on more than one occasion that we should proceed down the route of having a Speaker. We will remain self-regulating as we are now.
	As the noble Lord, Lord Cope, said, there are at least two more debates to come on the Speakership. Some interesting amendments have already been tabled for the debate next Tuesday on the Speaker's salary and it will probably be a more lively debate than today's. However, that is for next Tuesday, not today, so I do not intend to say anything more about it.
	I did not mention introductions in my little speech but, as the noble Lord, Lord Cope, said it is a sensible move, and it will enable Peers to be introduced at eleven o'clock on a Thursday morning, which they will be able to follow with lunch instead of having a curtailed lunch before their introduction. I hope that will be popular.
	On PNQs, I disagree with the noble Lord, Lord Trefgarne, when he hopes that there will be many more. In fact, the noble Lord is wrong because a PNQ was recently allowed by the Leader of the House. It was asked by the noble Baroness, Lady Anelay, on some aspect of a Home Office Bill within the past few months. I hope that reassures the noble Lord, Lord Trefgarne. I commend the Motion.

On Question, Motion agreed to.

National Lottery Bill

Report received.
	Clause 7 [National Lottery Distribution Fund: apportionment]:

Viscount Astor: moved Amendment No. 1:
	Page 5, line 13, leave out "prescribed"

Viscount Astor: My Lords, in moving Amendment No. 1, I shall speak also to Amendments Nos. 3 and 14. The main aim of these amendments is to ensure that the Big Lottery Fund is officially established on the same footing as the other distributing bodies with the same amount of prescription by the Secretary of State. Amendment No. 1 removes the description of Big Lottery Fund expenditure as "prescribed". Amendment No. 3 takes out Clause 7(3), which describes what prescribed expenditure is. That subsection states that,
	"'prescribed expenditure' means expenditure of a description prescribed by order of the Secretary of State",
	which means that the whole of the 50 per cent of lottery distribution going to the Big Lottery Fund should be prescribed by the Secretary of State. That subsection also allows for the prescription of devolved expenditure. Amendment No. 14 attempts to establish the Big Lottery Fund on the same footing as other distributors.
	We debated these issues in Committee and at Second Reading. As your Lordships will remember, the original lottery distributing bodies were set up to comply with directions on matters to be taken account of when distributing lottery funds. The funds had to comply with directions relating to their management in terms of accounting, the delegation of powers, and so on. That was also how the Community Fund was set up by the Government when they changed from four original good causes, and how the Millennium Fund, which has come to an end, was set up. But when the New Opportunities Fund was set up by the Government, there was greatly increased prescription. The New Opportunities Fund had to comply with directions from the Secretary of State on all matters including the distribution of grants. We always felt that it was entirely reasonable that the Secretary of State could tell distributing bodies what to consider when awarding grants, and intervene directly to correct mismanagement or unacceptable accounting practices. That was part of the original Act when it went through this House creating the National Lottery.
	The Government gave themselves a lot more powers over the New Opportunities Fund, however. The Minister has said on a number of occasions that they are backstop powers that will not be used, but when we make other suggestions, he says that there must be entire flexibility in these matters. Unfortunately, the Government cannot have it all ways on the Bill at the same time. The logic of their arguments does not stand up to scrutiny. It worries us because we know that when they originally looked at introducing the Bill, the Government planned to create one distributing body—a vast Big Lottery Fund, which would distribute all the lottery money. Luckily, that plan has been shelved, but it may have been shelved only for the moment—who knows?
	The Government have, as we have heard before, broken their own rules on additionality. Indeed, almost everyone involved in the lottery has admitted that that has happened—the only people who have not admitted it are the Government, but it is clear that it has happened. We know that from a recent reply to a Written Question from my noble friend Lord Howe about how money was awarded for projects affecting the health service. Until quite recently, the DCMS website used to highlight the fact that the Government were investing £2 billion of public and National Lottery money in sport by 2006. That has now been changed. It now says that £3 billion is being invested in sport by 2006, coming from both the Government and the National Lottery. That is an improvement.
	The Government have given themselves much greater powers over the distributing body. They cannot argue that they need those powers over one distributing body rather than over the other two. The argument that they need it because it is bigger is not good enough. We ought to be talking in this Bill about principles. The principle should be that National Lottery expenditure should be additional. The Government should not be involved. We all know that there are problems when the Government are not involved—that there are National Lottery projects that are turned down that we would individually like to support, and that some go through that we find somewhat objectionable. That is the nature of the system and we have to accept that that will always happen. At the same time, some projects are more successful than others. However, if we are to create an independent body which is independent of government, we will have to accept those aspects as being part and parcel of the process.
	I am afraid that the Government do not have a good record. They have interfered. They have encouraged the use of National Lottery money in ways that are clearly not additional. We find that there is no good excuse for the Government giving themselves these powers, which are over and above what was ever considered when the original National Lottery was established. They are powers that are greater than for the other distributing bodies. They are not necessary and it is not good enough for the Government to say that they are a backstop and a reserve. If the Government really felt that 50 per cent of the lottery funds in this country were being misspent, they ought to come back to Parliament with a new lottery Bill. That is why my amendments are necessary. I beg to move.

Lord Clement-Jones: My Lords, we on these Benches agree with the noble Viscount, Lord Astor, that the Bill in its current form constitutes an unacceptable level of government control over funding from the Big Lottery. In Committee, the Minister talked of broad categories, high-level themes and a broad strategy, not detailed prescription. His final throw was a framework for the devolved administrations. However, we are actually talking not about the Government's intentions in the Bill but about the Government's powers in it and the possible exercise of those powers. That is the right way to look at the Bill.
	The concordance makes it absolutely clear that these are additional powers to prescribe in greater detail within the broad categories set out in Clause 22 as it would be amended. That is the big problem. Why does moving from some 33.3 per cent of the lottery proceeds to 50 per cent justify these increased powers? Nowhere, certainly not in Committee, has the Minister justified why that should be the case, so he has not explained the position properly. He has talked about the need for such powers of prescription in view of the money involved and so on. But in the previous 1993 Act, as amended, those powers do not exist for the New Opportunities Fund.
	I recognise that the noble Baroness, Lady Pitkeathley, who I am sorry is not in her place today, said that a light touch was in practice exercised by the Government. I do not believe that that is necessarily relevant in this case. Governments then did not have the powers they are giving to themselves in the Bill. That is essentially the concern of the voluntary sector, which is so well reflected in the amendment put before the House today.

Lord Davies of Oldham: My Lords, I am grateful to both noble Lords who have contributed to the debate, although I must say that I have not heard arguments today which are very different from those presented in Committee. Therefore, I am sure noble Lords will not be surprised that my response is very much along the lines of the response I made in Committee, if only for the purpose of consistency.
	Amendments Nos. 1 and 3, as the noble Viscount, Lord Astor, pointed out, seek to remove the Secretary of State's power to prescribe expenditure regarding the new Big Lottery Fund good cause; and Amendment No. 14, which I am pleased to see included in the group, would provide that the Big Lottery Fund must take into account rather than comply with any direction given to it by the Secretary of State.
	It was not just in Committee that these issues were discussed; there was intensive discussion in the other place. I recognise the strength of feeling on the other side of the House on these matters, but we also feel strongly that the concerns that have been expressed are unfounded. We have had a considerable time to consider these arguments since they were first voiced in the other place some time ago.
	Noble Lords are speculating on the powers in Clauses 7 and 14 and how they will be used. We think that we have taken out the issue of speculation because we have published an illustrative draft order and directions. We sent these out to all noble Lords interested in the Bill and of course placed them in the Library. It is open to noble Lords to be suspicious about the Government's intentions, but suspicion is usually based on the fact that information is being withheld. I do not think that the Government could have been more open than they have been about how they intend to interpret this Bill if it becomes an Act in terms of the order and directions which we will employ.
	Every commitment that we have given, even those where the commitments are firmly on the record in this House or another place, are largely being disregarded. Therefore, I do not think it is for me to make a very long speech today against these amendments. Without the power to prescribe expenditure, the Big Lottery Fund would be given 50 per cent of all the lottery good-cause money to spend on anything that is charitable or connected with health, education or the environment without any further recourse to Parliament. I understand that the noble Lord, Lord Clement-Jones, views this with complete equanimity. The Government disagree with him. We do not think that it makes sense.
	The large new spending area of health, education and the environment, which we created in 1998, has of course proved popular and successful. It has enabled thousands of worthwhile projects to be funded, including ones which have benefited more than 30,000 World War II veterans, war widows and carers. It has helped to provide more than 2,100 village halls and community buildings. The new Big Lottery Fund good-cause funding brings these areas and the charitable expenditure distributed by the Community Fund together, allowing an enormous range of projects to be encompassed. This is a good thing, and it is one of the main reasons why we wanted to bring the Community Fund and the New Opportunities Fund together. But it creates a very different kind of good cause from the existing arts, sport and heritage good causes. Arts, sport and heritage are much narrower areas, and the existing legislation narrows things further by prescribing sums to be distributed by different distributors. As I said in Committee, this not only limits who can spend the money, but restricts what the money can be spent on. For example, prescribing the percentage to be distributed by the UK Film Council in effect prescribes the percentage of money for the arts good cause that must be spent on film.
	In 1993, Parliament took the view that such arrangements were necessary to ensure the effective distribution of lottery money. That degree of prescription has obtained in the lottery since its inauguration. The powers we are proposing in the Bill have a similar effect, and we believe that they are just as necessary now as they were in 1993. We need to be able to set out at the highest level the types of expenditure that the Big Lottery Fund should focus on. I emphasise that we are obviously talking about broad areas of expenditure. We are not talking about programmes or projects, or about the split between the four parts of the good-cause funding or between the four countries of the United Kingdom, and we are certainly not talking about specific grants. We have made an illustrative order demonstrating how the power to prescribe expenditure will be used in practice.
	We could not be clearer about our intentions, and I fail to see what more we could do to assure noble Lords on the opposition Benches. Yet, to my knowledge, no one has found anything concrete to object to. I take that as evidence that the concerns we have heard so much about do not have much basis in fact. It was suggested in Committee that the Bill would give the Government more power over the Big Lottery Fund than was afforded over the New Opportunities Fund in the 1998 Act. I contend that that is simply not so. The 1998 Act limited the New Opportunities Fund's spending to initiatives specified by order by the Secretary of State. Those initiatives tended to be much more narrowly focused than the broad themes we are proposing for the Big Lottery Fund.
	I am in no way saying that the approach towards the New Opportunities Fund was wrong. Indeed, it was very successful. It provided a strategic focus for lottery funding, and had a much more prescriptive approach than the one we are proposing in the Bill for the Big Lottery Fund. The noble Lord, Lord Clement-Jones, mentioned that my noble friend Lady Pitkeathley was not here; I regret that too. I am glad that she is present. She has considerable experience of these issues, and she made it quite clear in Committee that the New Opportunities Fund experienced no government interference in specific expenditure. I should also make it clear that the ability to prescribe devolved expenditure is central to devolving more decision-making to Scotland, Wales and Northern Ireland, which is the aim of the Bill. I am afraid that Amendments Nos. 1 and 3 would mean that the devolution arrangements in the Bill would not work. They would retain power for the Secretary of State just where the Government intend to devolve it. That seems somewhat ironic, given the Opposition's perceptions, which we have all heard, of the Secretary of State's excessive control. We cannot accept Amendments Nos. 1 and 3, and I ask noble Lords to consider not pressing them to a vote.
	Amendment No. 14 would require the Big Lottery Fund to take into account, rather than comply with, any direction given to it by the Secretary of State. All lottery distributors are required to comply with directions about financial and operational matters, which are set out in new Section 36E(3). Such financial directions incorporate financial controls designed to protect public money by ensuring that distributors comply with basic financial and operational good practice. The requirements placed on the Big Lottery Fund by new Section 36E(3) are exactly the same as those placed on other distributors in Section 26 of the original 1993 Act, which set up the lottery. We do not see any reason for change.
	Section 36E(2) sets out the powers to issue policy directions. I emphasise that the powers have been drafted in the way that they have in order to bring together the different regimes of control that existed over the Big Lottery Fund's prior bodies, and to bring them together in a coherent way. Both the Community Fund and the New Opportunities Fund had to comply with policy directions. The Community Fund, like other lottery distributors, was required to comply with any directions given to it by the Secretary of State as to the matters to be taken into account and to determine the persons to whom, the purposes for which, and the conditions subject to which it distributed the money.
	The key difference between that requirement and those set out in the present Bill is in the matters to be taken into account. A statutory requirement to comply with directions as to the matters to be taken into account is a real legal obligation. The Community Fund could not pick and choose which direction it complied with; it had to take all the policy directions into account and could decide to ignore them only under exceptional circumstances.
	This debate has therefore become overly focused on a narrow point, when the real issue is how the powers of directions will be exercised. We have given repeated commitments that we will adopt a light touch on direction of the Big Lottery Fund—we said so in stages of the Bill in the other place, I said so in Committee in your Lordships' House, and I reiterate the point today. We demonstrated our integrity with the issue of new interim policy directions for the New Opportunities Fund and the Community Fund. These directions are, as far as possible under the existing legislation, the same as those we will issue in due course to the Big Lottery Fund, and our intention is set out clearly in the illustrative directions that we have made available to the House and which we propose to introduce after Royal Assent.
	Both the interim and illustrative directions are very different from the type of directions issued in the past to the New Opportunities Fund, although those were also applied with sensitivity and consideration. They provide the means by which the funding outcomes and priorities agreed with the Government and supported in the Big Lottery Fund's consultation will be delivered. But they do not—and I emphasise this point again—prescribe how they should be delivered, or preclude other worthwhile priorities being funded. They will allow the fund full scope to make decisions on programmes, choose delivery mechanisms, identify partners and select projects informed by intensive public consultation.
	In conclusion, I hope we can focus on the real issue and put this matter to bed now once and for all. I hope that noble Lords will recognise that we are not being overly prescriptive; we are making it quite clear how these powers will be exercised and I hope that with that level of reassurance the noble Viscount, Lord Astor, will feel able to withdraw his amendment.

Viscount Astor: My Lords, the noble Lord, Lord Davies, said that he was not being overprescriptive. In that case, he will not have much of a problem in accepting my amendment. But, of course, that will not be the case. He said that there would be no new arguments from the Government: I think that the noble Lord, Lord Clement-Jones, and I can agree that we did not hear any new arguments.
	During the passage of this Bill, we on this side of the House have been grateful to the Minister for providing draft directions and draft orders. It has been enormously helpful for us to understand the Government's thinking. If we could have more of them, more Bills would have a smoother transition through your Lordships' House. However, I am still trying to get myself around the interpretation of a "transformational grant", as outlined in the directions, but I am sure that I will finally understand it.
	The Minister's defence against my amendment is simple: namely, that the Secretary of State's powers will set out at the highest level how expenditure will be made by the distributing bodies. The answer is that Clause 7 already does that. It sets out expenditure at the highest level. My amendment does not change that. It would delete "prescribed". It leaves in,
	"charitable, or (ii) connected with health, or (iii) connected with education, or (iv) connected with the environment".
	The Minister said that this would not allow the Secretary of State to prescribe expenditure as it related to the devolved assemblies—Scotland and Wales. The argument works both ways. Perhaps we should have an amendment to say how the Big Lottery Fund should hand out the money to devolved areas. Under this amendment, the Secretary of State would be allowed to say to Scotland, Wales, Northern Ireland or wherever, "Well, I am very sorry. You have had too much. We will not give you so much this year". I do not think that the Minister's argument can work for and against him. It works equally both ways. I am sure that the noble Lord, Lord Clement-Jones, and I will discuss the issue before Third Reading.
	Whatever the arguments, the Minister cannot claim with any validity that this Bill does not give the Government greater powers. It is a matter on which we disagree. I must ask the opinion of the House.

On Question, Whether the said amendment (No. 1) shall be agreed to?
	Their Lordships divided: Contents, 118; Not-Contents, 116.

Resolved in the affirmative, and amendment agreed to accordingly.

Viscount Astor: moved Amendment No. 2:
	Page 5, line 18, at end insert ", or
	(v) for the purpose of national acquisitions, as defined by the rules of the National Heritage Memorial Fund, such expenditure to be managed by the National Heritage Memorial Fund.""

Viscount Astor: My Lords, this amendment concerns the possibility of a fund to support national acquisitions. Your Lordships will remember that in Committee I moved an unsuccessful amendment to return the lottery to supporting the original four good causes, which would have increased the amount of money going to the National Heritage Memorial Lottery Fund to 25 per cent. I also moved an amendment which would have enabled a fund to be set up for national acquisitions. That is a problem that the Government occasionally make noises about but have failed to come up with any form of policy on. This is my attempt to tease out of them some form of commitment that they will do something either now or in the future.
	The problem is that over time the government grant to the National Heritage Memorial Fund—not the lottery part of it, but the memorial fund—has declined from its highest level of £20 million to £5 million a year. That is the fund that enables the National Gallery, or institutions like that, to get a grant to fund or part-fund when objects may go abroad which the Export Reviewing Committee, which was set up by the Government, has recommended should stay in this country. That happens more and more. Just last week the Culture Minister, Mr Lammy, placed a two-month export ban on a large silver plateau marking a British victory in the Anglo-American war of 1812. The ban provides the last chance to raise £696,000 required to save that important antique. However, two months is a very short time to save that object or, indeed, any object. There is a problem.
	The lottery part of the National Heritage Memorial Lottery Fund is not able easily to fund acquisitions. It has already been criticised by the Government for having too much unspent capital. The Government say that lottery distributors should cut unspent funds. In many cases that is a good thing, but if you are trying to build up a reserve or an emergency fund, it is not terribly helpful.
	My proposal is simple: to allow money to be allocated from the Big Lottery Fund—which, after all, is now taking the majority, the 50 per cent—for the purposes of national acquisitions, as defined by the rules of the National Heritage Memorial Fund. The matter would be managed by the National Heritage Memorial Fund, so there would be no question of involving the Big Lottery Fund on a project-by-project basis in deciding who should get a grant. Under the rules of the National Heritage Memorial Fund it is clear that the measure would be applied only for objects of outstanding national importance, as defined by the Reviewing Committee on the Export of Works of Art, which is a government committee. My amendment seeks to set up a fund that is, in effect, ring-fenced for that purpose. Under the amendment, balances could be built up to enable the fund to be prepared to make acquisitions as we all know that certain collections in this country will be in danger in the future. The Treasury accepts works of art in lieu of taxes, but that measure is also cash-limited. Should a large number of objects come on to the market in any one year, either due to owners' deaths or owners who wish to sell, the low ceiling of the Treasury's measure would be gone through very quickly.
	I hope that the Government will be sympathetic to the amendment in principle and will tell us how they seek to solve the problem. I accept that my amendment might not be the right way to do so or that it might not be well drafted. However, I hope that the Government will address the principles of the concerns that I have outlined. I beg to move.

Baroness Bonham-Carter of Yarnbury: My Lords, the noble Viscount, Lord Astor, has spoken rather modestly. We on the Liberal Democrat Benches fully agree with what he is trying to do. At present the funding of acquisitions seems to be a low, if not marginal, priority of the Government. Collections must not, and cannot, remain static. Back at the turn of the previous century, I believe that John Maynard Keynes, who then worked at the Treasury, recognised that it would be useful if money was allocated to buy paintings from the Degas sale that was taking place. Those paintings have formed an incredibly useful and essential part of the National Gallery's collection. At present it is difficult for bodies to find the money to buy the paintings and so on that they need to build up their collections. Therefore, I fully support the amendment proposed by the noble Viscount, Lord Astor.

Lord Davies of Oldham: My Lords, on that last point I shall not dispute with the noble Baroness that there are extremely worthwhile possibilities in terms of the effects of the resources that are available for ensuring that we increase our very extensive art collections in this country. But the issue is not whether there are desirable forms on which expenditure should be made, but whether this is the right way to go about it. We had an interesting discussion in Committee on the desirability of making grants to purchase and conserve items for our national collection, and to preserve historic buildings. It is not the burden of the case that the Government disregard such important priorities; that is why the heritage fund is there. We recognise the importance of those elements in the cultural life of the nation, and I pay tribute to the way in which challenges have been responded to in that area.
	The Heritage Lottery Fund has made 451 awards for the acquisition of works of art and cultural objects by museums and galleries to a total value of £135 million, and the overall success rate has been 86 per cent. It has awarded more than £1 billion to the conservation of 9,500 historic buildings. The range of what has been supported is a checklist of a great deal of what is of value and interest to the cultural heritage of this country, ranging from Raphael's "Madonna of the Pinks" to the "Flying Scotsman" locomotive.
	Those are some of the big items, of course—and very costly. But there have been many smaller ones, benefiting visitors to regional and local museums and galleries. It bears repeating for those who still feel that a new initiative, or a special fund, is required, that the Heritage Lottery Fund has given more than £590 million, which includes conservation of cultural objects of national importance, such as 42 historic steam, diesel and electric locomotives and 58 ships and boats. We also need to bear in mind that even this wealth of grants from the lottery is not the whole picture. Grants made by the National Heritage Memorial Fund, which is supervised by the same trustees but funded by the taxpayer, have also contributed strongly in this field. Most of the £220 million that that fund has provided in the past 26 years has gone in that direction, saving 1,200 iconic objects and places for the nation, including Tyntesfield House. Its annual budget will soon rise from £5 million to £10 million, which we all welcome.
	I recognise that the amendment is different from that tabled by the noble Viscount, Lord Astor, in Committee. He is to be applauded for his ingenuity and persistence on what we recognise as a good cause in terms of desirable expenditure. The amendment does not fix a percentage of funds. Indeed, it attempts not to take money from the Heritage Lottery Fund at all. It is still unnecessary, given the track record of grant giving that I have just described. The amendment is not only unnecessary; I am afraid that I still find the concept objectionable. It brings the Big Lottery Fund into the equation, and tries to change the overall remit of the BLF to extend it to cover the heritage fund.
	The remit that we propose for the Big Lottery Fund is essentially about grants for community groups. More specifically, it is about health, education, the environment and charities. Of course there is bound to be overlap in, say, education and the environment, but it makes no sense at all to try to duplicate complete responsibility for supporting our heritage between two lottery distributors instead of one. If the aim of the amendment is to take money from charities, health and education to boost the money for acquiring works of art, the appropriate way to do that would be to propose a change in the percentage shares each cause will receive. We do not think that there is any need to change the shares.
	The Heritage Lottery Fund is already well able to assess competing needs and the opportunities out there to which they can respond; they are doing an excellent job. It may help your Lordships to know that the Heritage Lottery Fund recently brought together a preliminary meeting of the museums sector to discuss the existing mechanisms for providing financial support for acquisitions and whether additional support is needed. Another meeting is planned for June, and I understand that there is every likelihood that further improvements can be made to what are already good arrangements in the national heritage fund.
	What this amendment seeks to achieve does not help the situation at all. It would blur the lines, by creating difficulties in accountability, and it would require judgments outside the expertise of the national heritage fund, when it is surely better to recognise the excellent job done there and ensure that it has the resources to do that job. I am as one with the noble Viscount, Lord Astor, and the noble Baroness, Lady Bonham-Carter, in emphasising the desirability of expenditure on our national heritage. That is what the heritage fund is there for. Trying to create an acquisitions fund through the back door, by tackling the Big Lottery, is not the way to do it. I therefore ask the noble Lord to withdraw his amendment.

Viscount Astor: My Lords, the Minister said that this would require judgments to be made outside the Heritage Lottery Fund. If the Minister looks at my amendment with care, he will see that is not the case. It enables the Big Lottery Fund to fund an acquisitions fund, and I clearly said in moving the amendment that all decisions on individual applications would of course remain with the Heritage Lottery Fund and not involve the Big Lottery Fund. I am sorry that the Minister did not take that into account in seeking to address my concerns.
	I can see that I will not make much progress with this amendment, which is a pity because with one hand the Government are encouraging distributing bodies to wind down their balances, meaning—particularly when it comes to the National Heritage Memorial Fund, with its many long-term commitments—that they sometimes do not have money available to make quite large and rapid grants. As I have explained, there is often only an eight-week opportunity to buy something; it is then quite difficult to get through the application process. The Government are on the whole not addressing this problem, which is disappointing. At some point the Government will be forced to do so, when a major national collection runs the risk of going abroad and they will not have done enough to safeguard those interests. They will have to address the issue in the future.
	I am sorry that the Minister has been unable to be more forthcoming in his answers. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 3 not moved.]
	Clause 8 [Reallocation of funds]:

Lord Boston of Faversham: My Lords, in calling the next amendment I must point out that if it is agreed to then I cannot call Amendments Nos. 5 or 6.

Viscount Astor: moved Amendment No. 4:
	Page 6, leave out lines 6 to 8.

Viscount Astor: My Lords, this simple amendment prevents money in outstanding balances being used by being moved from one distributor to another. As the Minister said, this is a reserved power, only to be deployed in extreme situations. The Government always want these powers just in case, but we believe that if that happened the whole distributing mechanism of the lottery would be in such chaos that the Government would have to come back to Parliament, and it is right that they should do so rather than give themselves this power.
	A secondary concern—the Minister may be able to help the House on this—is that the Government set up funding for the Olympics from the distribution fund and we are always concerned that they will get their sums wrong or there will be overspending on the Olympics, which would be a way of the Secretary of State topping up the Olympic lottery fund. It would be helpful if the Minister could say that there is no chance of that happening by a redistribution of balances. I beg to move.

Lord Davies of Oldham: My Lords, in Committee, we had a debate closely related to this one. I said then that I thought the amendments reflect unwarranted concern about the Government's intention in respect of the proposed reserved power to reallocate an excessive National Lottery Distribution Fund balance from one lottery distributing body to another body. Amendment No. 4 would sabotage the concept behind the issue that we are tackling on balances. I emphasise again the assurance that I gave in Committee, which had been given repeatedly by ministerial colleagues in another place: the power will be used only as a last resort against the distributor which stubbornly and persistently failed to manage its balance to a reasonable level.
	In Committee, both the National Audit Office and the Public Accounts Committee of another place have concluded that the public benefit of lottery money is fully delivered only when that money is spent on projects in the community. There is no value to the community in large balances. Distributors have already made great progress in reducing balances. The overall balance has fallen from a peak of more than £3.7 billion to less than £2.2 billion now. Distributors which manage and set clear targets for balances, as all the main ones are now doing, will have nothing to fear from this power. The existence of the power will represent a discipline to ensure that this progress continues and will provide an added safeguard against a return to the days of very high balances which, as I maintain, are of no value to the community.
	We need a reserved power in case any distributor should, in future, build up an excessive balance and fail to tackle it. Noble Lords have expressed concern that were the Government to propose using the reallocation power to transfer a balance from, say, the Heritage Lottery Fund, there would be no other body suitable to accept the transfer. I remind the House that when the Government first introduced the National Lottery Bill in another place in the autumn of 2004, it included a reallocation power that would have enabled an excessive NLDF balance to be transferred not just from one distributor to another but from one good cause to another. Such a power would have enabled funds to be transferred, for example, from the heritage good cause to sport and the arts. It is because the Government were prepared to listen to the concerns expressed assiduously at that time by, among others, the heritage lobby, that Clause 8 of the Bill proposes a reallocation power that could be used to make transfers only within individual good causes. I hope that gives some reassurance to the noble Viscount, Lord Astor, as he was eyeing the power as a possibility for coping with the Olympic Games costs. I can assure the House again, as I have done within the framework of other debates, that of course the Government have fully costed the Olympic Games and are making provision to ensure that those costs are met through well identified routes. It is certainly not the intention that this power is used in those terms.
	For some good causes, including heritage, there is only one distributing body. That does not provide a good reason to exclude these good causes from the reallocation power entirely. In the unlikely event that the sole distributing body for a good cause allowed an excessive balance to build up in the future, and that body failed to tackle it, the existence of the reallocation power would be justified.
	The proposed reallocation power provides a better solution than any that have otherwise been proposed, and better certainly than the powers in the 1993 Act, which could reduce a body's long-term income stream as well as its balance. In our view, we have a better approach than existed in the previous legislation.
	The whole point of using the power would be to find another body to accept such a transfer and to use the funds more quickly than the transferring body, without sacrificing public value from the expenditure. If such a recipient body could not be found, the Government would not propose using the power.
	I want to emphasise those points and also to contend against the argument of the noble Viscount, Lord Astor, on Amendment No. 6, which would build in a specific requirement for the Secretary of State to consider the effects on a distributor's longer term commitments before exercising the reallocation power. We had this debate in Committee and I gave assurances that the Government would not use the proposed reallocation power in a way that would threaten any existing commitment.
	The burden of the noble Viscount's contention was that because the National Heritage Fund has existing long-term commitments, for reasons that we all fully understand, it needs that reassurance—as does the noble Viscount, Lord Astor. I repeat that assurance now. The Government fully recognise the great public benefit derived for many long-term lottery projects in the past.
	I also pointed out the difficulty of interpretation that the amendment would create—about what would constitute a threat to a distributor's long-term commitments. The Government would not, for example, accept that in every case a distributor needs to hold funds in its balance now to meet a commitment that is likely to fall due for payment in five years' time. However, in the unlikely event that we ever propose using the reallocation power, the Government would take into account the distributor's existing NLDF balance, its likely future income from the lottery and all its forward commitments.
	I would like to reassure the noble Viscount on forward commitments. In other words, the Government would look at a distributor's in-principle commitments as well as its contractually binding, hard commitments. Depending on the interpretation of "commitment" in the amendment before us, it might have the effect of compelling the Government to take fewer factors into account if they ever proposed to use the reallocation power. I am sure that the noble Viscount, Lord Astor, would not want that result, which, I believe, would be the opposite of what he is seeking to achieve.
	I will repeat, because of its pertinence, what I said in Committee about the National Audit Office report on NLDF balance management, published in July 2004. The National Audit Office suggested that distributors should increase their forward commitments as the most effective means of reducing their balances in the long term. The Government are hardly likely to propose using the reallocation power against a distributor that had followed exactly that advice by making longer term commitments.
	I rest the Government's case on this matter. We only regard this as a reserve power, against a background that we want to emphasise clearly: balances are necessary to meet longer term commitments—that goes without saying—but balances as such are of no value to the community. It is right that we should have this reserve power where a balance might be excessive.
	I hope that the noble Viscount will think those arguments strong enough to withdraw the amendment.

Viscount Astor: My Lords, I am grateful for the Minister's response. It has given me reassurance. I hope, for the Minister's sake, that his words, "The Government have fully costed the Olympic Games", do not come back to haunt him in future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Lord Bishop of Sheffield: moved Amendment No. 5:
	Page 6, line 14, at end insert ", and
	(e) such other persons as he thinks appropriate.""

The Lord Bishop of Sheffield: My Lords, I am encouraged to bring back this simple amendment because of its sympathetic reception in Committee. It is simply a matter of incorporating into the Bill what is agreed by all to be good practice, in order that those most affected by any transfer of funding will know for certain that the consultation will take place. The need for such consultation, outlined by the right reverend Prelate the Bishop of Southwell and Nottingham, is well known from the records of earlier proceedings, as is the Minister's response. However, I am emboldened to press the matter for one good biblical reason.
	Joseph, he of the technicolour dreamcoat, was extremely well treated by Pharaoh when in Egypt, as was his family—until, so we are told, a Pharaoh came along who "knew not Joseph". Then it all went wrong. The children of Israel ended up in slavery, and Pharaoh did not do very well either.
	While assurances may be enough for now, who knows when a Minister may come along who knows not the right reverend Prelate the Bishop of Southwell and Nottingham and his like? It is better to be safe than sorry. I beg to move.

Lord Clement-Jones: My Lords, I thought the right reverend Prelate the Bishop of Southwell and Nottingham was pretty persuasive last time. The right reverend Prelate the Bishop of Sheffield has been even more persuasive this time. Indeed, I recall encouraging the right reverend Prelate the Bishop of Southwell and Nottingham to come back with the amendment. It seemed that it was perfectly analogous to the previous clause. There was no reason why these words should not be in this clause, as they are in Clause 7. Putting them in the Bill would make it more consistent, and would prevent a future Pharaohnic Minister from arising and not knowing the Church of England, or any other body that might wish to be consulted in these circumstances. The amendment is well worth supporting. One of my reasons for encouraging it to be brought back—when I tabled my own, rather weaker, amendment—was that the Minister had no answer to it except that it will happen. I am doubtful as to whether that is an adequate ministerial reply.

Lord Borrie: My Lords, in the face of such an excellent team of right reverend Prelates here this afternoon, I hesitate to say that I was not as persuaded as the noble Lord, Lord Clement-Jones. The amendment is to add the phrase, "such other persons as he"—the Secretary of State—"thinks appropriate", to the list of people whom he shall consult on the reallocation of funds. If this had been expressed in objective terms, I might have seen that it had a point. Given that the amendment is expressed as simply adding that phrase, and that—I think I am right in saying—the Secretary of State, under this clause and any other such powers, is always entitled to consult whom he thinks fit, what does this add to the normal procedure? On the argument of the right reverend Prelate and the noble Lord, Lord Clement-Jones, it would mean that we have to add that rather pointless subsection to every Bill.

Lord Clement-Jones: My Lords, I thank the noble Lord for giving way. Does he recall that a similar amendment was made to the Olympics Bill on consultation? The precise words—except for "if any"—are contained in new subsection (3C)(e) in Clause 7(3). Does the noble Lord agree that Clause 8 would be much more consistent with Clause 7 if these words were added?

Lord Borrie: My Lords, I fear that the noble Lord is absolutely right. I see exactly what he says about Clause 7. I see no point in the last paragraph of that clause either.

Viscount Astor: My Lords, the Minister will wonder whether he has had any support from his Benches or whether he has been thoroughly torpedoed below the waterline—which I suspect is the case.
	The noble Lord, Lord Clement-Jones, is right. If it worked to have it in Clause 7 at new subsection (3C)(e) where the only difference is the words "if any"—it is unlikely that a Secretary of State could not find anybody to consult but it is theoretically possible—then it is even more appropriate that it should be in Clause 8. As the noble Lord said, we must have consistency in legislation. I fully support the amendment tabled by the right reverend Prelate.

Lord Borrie: My Lords, is it not the case that in any legislation dealing with ministerial powers, the Minister can consult whoever he wishes?

Viscount Astor: My Lords, I agree with the noble Lord. If that is correct, will the Minister bring forward an amendment on Third Reading to delete new subsection (3C)(e)?

Lord Davies of Oldham: My Lords, I will stick to the main theme first and move to that subsidiary one later.
	I owe the right reverend Prelate the Bishop of Sheffield a response to his amendment. He will recognise that at our preceding stage his colleague the right reverend Prelate the Bishop of Southwell and Nottingham had pointed out that were the Government ever to seek to use the proposed allocation power, there might be other interested parties apart from the distributing body from which the funds were being transferred, the body or bodies intending to receive the transfer and the administrations in Scotland, Wales and Northern Ireland.
	We accepted that there might be a wider range of interests. For example, Ministers for arts, sports and heritage would have a legitimate interest in the proposed use of reallocation power in their sectors. As I said in Committee, the wider sectors would have ample opportunity to make representation without this amendment. It is intended that any use of the proposed reallocation power would be subject to affirmative resolution, meaning that these matters would have to be debated subject to approval both in your Lordships' House and in another place. The proposed use of the power would be fully within the public domain well before it could be implemented and consequently it would be possible for all to comment upon it. I hear what my noble friend Lord Borrie says when he regards this as otiose because the Secretary of State has powers to consult but it is at times important that we identify specific interests that need to be taken into account.
	I am indicating that specific interests are taken into account as well as the mechanism by which effect is given to these proposals. They are subject to parliamentary debate and approval. That should allay anxieties. It particularly allays the anxiety that any Secretary of State might have Pharaoh-like powers. Secretaries of State change over time, as we have noticed, and it may be that they do not have all have excellent memories or that they are not briefed on what their predecessors said. But there is a world of difference between Pharaoh's Egypt, where arbitrary decisions could be taken by the powers that be, and a parliamentary democracy where we have built into the legislation the understanding that there must be public debate about this issue before the power can be used. I am not sure that Pharaoh could have tackled Joseph on the basis of these procedures.

Viscount Astor: My Lords, will the Minister address the point about why the Government have powers in Clause 7, to consult,
	"such other persons (if any) as he thinks appropriate"?
	Why is that necessary in one clause and not in the other?

Lord Davies of Oldham: My Lords, we are talking about a slightly different area of power. We have the power in the Bill as a consequence of the way action is taken subsequent to the decision being taken. I take on board the noble Viscount's point. If he proves to be right—and I think he would give due acknowledgment to my noble friend Lord Borrie—and what he has identified is a quirk or idiosyncrasy that has crept into the Bill affecting its overall consistency, which happens from time to time, I shall address my mind to that and will table an appropriate amendment at Third Reading. At this stage, the noble Viscount should rest assured that we have taken his point on board and will look at it.

The Lord Bishop of Sheffield: My Lords, I am reassured for now. I would not wish to press too far the comparison between Ministers of the Crown and the Pharaohs of ancient Egypt. None the less, one hopes for good memories and good briefings in future. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendment No. 6 not moved.]
	Clause 9 [Investment income]:

Viscount Astor: moved Amendment No. 7:
	Leave out Clause 9.

Viscount Astor: My Lords, this amendment concerns the redistribution of interest. When one tables an amendment in your Lordships' House, it is always interesting to see what happens and what lobbying one gets from outside. One is always quite surprised by what happens. The CCPR, which calls itself,
	"One voice for sport and recreation",
	claims that should my amendment be accepted, it would be inadvertently penalised because it would mean that when the Secretary of State allocated interest that has been built up over a period of time, instead of allocating it in the same share as the distribution bodies get it, he would be able to change the allocation. It is saying that because it spends its money quicker and faster than anybody else, it ought to be able, if necessary, to have a larger share of the interest. I find that bizarre. It seems to me that the CCPR ought to be seeking its fair share of the interest, not a larger share.
	We are not entirely clear why the Government need the power given by this clause to change where the interest goes. It is an issue that we discussed briefly in Committee. If my amendment is accepted, the reallocation would go to the existing bodies as they stand. I do not think this is an area where the Secretary of State needs to be involved. I beg to move.

Lord Davies of Oldham: My Lords, I am grateful to the noble Viscount for the terms in which he has moved the amendment. He will recognise that Clause 9 changes the way that income earned from the investment of the National Lottery Distribution Fund is divided between lottery distributors. We proposed changes to the method of allocating investment income because we considered that the existing method created an unintended advantage for distributors which hold high balances. Thus, potentially, communities were deprived of realising the benefits of lottery spending on the ground as fully and as soon as they might otherwise because of those high balances. The proposed changes will remedy that problem. They will mean that investment income on the NLDF balance will be shared out between distributors in the same fixed percentages as proceeds from the lottery operator, Camelot.
	As I pointed out in Committee, the new arrangements brought about by Clause 9 are consistent with our overall policy that there should not be a build-up of large balances, but that lottery proceeds should be delivering benefits on the ground as quickly as possible. That was the conclusion of the Public Accounts Committee of the other place in its report last October. The committee made it quite clear that the public benefit of lottery money is delivered when the money is spent in the community. I also repeat what I said in Committee about the proposed new arrangements being fairer and more transparent for all distributors. Under the new arrangements, distributors will have greater clarity about their share of the potential future income from the lottery.
	I recognise the concern that has been expressed about the impact on income to the heritage good cause. I recognise that it is possible to argue that there might be winners and losers in these arrangements. It is true that at present, the Heritage Lottery Fund holds a higher share of the overall NLDF balance than its share of operator-related proceeds to the fund. However, as the overall NLDF balance and distributors' individual balances continue to fall, the new arrangements that we have proposed here will have less and less effect over time.
	The NLDF was never intended to be an investment fund built up of huge balances. Lottery money does good when it is spent in the community. It is unfair that good causes and distributors who spend lottery income more quickly—for example in the sports and arts sectors—should in effect be penalised by receiving a lower share of investment income because they have spent their income.
	I recognise that a balance must be struck here—if I can use that term in this context. I understand the noble Viscount's anxieties. However, he will recognise that the concept behind Clause 9 is a worthy one. It is to ensure that money is spent most effectively. On the basis of that reassurance, I hope that the noble Viscount will feel able to withdraw his amendment.

Viscount Astor: My Lords, this means that the distributing body has a balance and the interest that is earned on that will be shared out. I suppose that one could regard that as a principle that the Government have operated in many instances in many worlds, such as pensions and savings. At least the Minister has been consistent. I see that I will not make progress on this and I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Clause 11 [Distributing bodies: publicity]:

Lord Clement-Jones: moved Amendment No. 8:
	Page 7, leave out lines 4 and 5.

Lord Clement-Jones: My Lords, in Committee, we had a fair degree of debate about the provisions of Clause 11, which has various purposes, but is essentially designed to ensure that the National Lottery distributors take a greater part in publicising aspects of the National Lottery. When the Minister described this in Committee, he said:
	"We have made it clear many times that distributors will not be in the business of promoting the National Lottery games".
	He continued:
	"Clause 11 will ensure that all lottery distributors can take part fully in the activities of the National Lottery Promotions Unit, which seeks to raise positive awareness of, and support for, the benefits of National Lottery good cause funding across the country".—[Official Report, 13/3/06; col. 1043.]
	I do not think that anybody would disagree with that. It is only when you turn to the provisions of the Bill that any doubt arises. Paragraph (c) mentions,
	"encouraging participation in activities relating to the National Lottery in general".
	That is when doubts begin to creep in. Those words are very broad. It does not say "encouraging participation in projects funded by the National Lottery in general" or something more specific. It really does not reflect the Minister's assurance.
	Paragraph (c) makes it looks as though the National Lottery distributors could encourage participation in the National Lottery itself. That is what voluntary organisations are concerned about. They do not believe that this wording is sufficiently concise or precise to set out what the Government's real intentions are. This amendment clearly is a blunt amendment. It would be very helpful if the Minister could indicate whether, as the Bill proceeds to Third Reading, the Government will come back with a more concise amendment to that particular paragraph. There really is a great deal of ambiguity about the provision and it does not reflect the assurances that the Minister gave in Committee. I beg to move.

Lord Davies of Oldham: My Lords, as the noble Lord, Lord Clement-Jones, indicated, we had an extensive debate on this in Committee, and I appreciate his concern that this paragraph could be interpreted as empowering lottery distributors with the opportunity to encourage people to gamble. That is not the intention behind the paragraph. The promotion of lottery games is the business of the lottery licence holder. The reason we have the paragraph is to make it clear without any doubt that lottery distributors have the power to encourage people to get involved in wider events that promote the lottery good causes and spending on them, such as National Lottery Day and the National Lottery awards.
	The National Lottery Day is not designed to encourage participation in the lottery—although I recall on two occasions the noble Lord, Lord Clement-Jones, indicating that was how he conceived of it. It is not; it is designed as a way of making clear to the public the full range of the benefits of lottery good-cause funding. We know from our own research that the public believe that they should be much better informed about where National Lottery money has gone. There is a substantial task to be fulfilled in informing people about how they approach the lottery for causes which they would want to see possibly supported by it and they want reassurance that the very substantial sums involved are well spent.
	The public are very pleased when they hear not only where the lottery money has been spent but also the reasons behind the expenditure. I think that is because too often they get only the bad news from the media. They get such news when an easy headline is made about an apparent misdirection of lottery expenditure. We may be treated to that later this afternoon. We had that—the noble Viscount, Lord Astor, will not mind me chiding him gently on this point—when we were talking about funding for international expenditure. The only interest that the media managed to produce across this very wide range of international expenditure was for a tiny amount—a few thousand pounds—which was spent on an unsuccessful attempt to establish a guinea pig culture in a series of Peruvian villages. A fractional amount was spent on that project, to say nothing of it being a tiny amount of the overall expenditure on international matters.

Viscount Astor: My Lords, the Minister is very kind, but he has tempted me to my feet and I am afraid that I cannot resist. I quite understand what he said, but perhaps he could deal with a point of principle that relates to what the noble Lord, Lord Clement-Jones, said. A grant of almost £30,000 was recently made to Manchester United, which has just been sold for, I think, almost £2 billion, to keep its staff fit. I am sure that that is a thoroughly laudable thing to do. When the Sport England spokesman was asked about it, he said:
	"We cannot and should not discriminate against a firm based on whether it is perceived to be wealthy".
	That rather confuses because, in light of what Ministers have been saying about who should receive lottery grants, surely distributing bodies should consider the assets of the institutions which are to receive the money before they simply hand it out.

Lord Davies of Oldham: My Lords, the noble Viscount will realise that I was waxing rather more happily about the problems of Peruvian guinea pigs than about expenditure on Manchester United. It is an illustration of bad news driving out good—an all-too-frequent experience, as we all know. Quite frankly, 3 per cent of the money which the regional sports board is spending in the north-west was directed to that project, so we are talking about some fairly minimal amounts. Sport England, not the Government, was responsible for that decision. I must say that the Opposition have used most of our debates at all stages of the Bill to tell the Government to stay out of these matters. It is a little ill for the Government to have to respond to a decision about Manchester United, which is always highly newsworthy.
	The intention was of course that employees should benefit from the drive towards an improvement in the health and fitness of employees at work—objectives that I think we would all share. The problem is clearly whether lottery money should be spent on the employees of a company that should be able to provide for such an improvement in abundance. That is an entirely legitimate question, although it was not legitimately addressed to me for the reasons that I just gave. It has caused some reasonable concern, but I simply want to put it into context. Other employers, of course, are not as extraordinarily endowed as Manchester United. The project was to get employers involved in an area in which a very large number are shamefully neglectful.
	The criteria required the employers to make a submission. It might have been said subsequently that the criteria should have included the kind of resources commanded by the employers, but in fact they covered the numbers of people involved, their participation in such programmes and what would be done with the money. Manchester United made a convincing case. Sport England has assured us—and we have looked into this as a consequence of this discussion—that all 41 awards were made according to the relative merits of the applications received, and that the prominence of the applicants had nothing to do with the decisions. The noble Viscount may be asking why the Government did not intervene in a matter of public concern, but I am sure he would recognise that that would not be our line.

Viscount Astor: My Lords, may I correct the Minister? I hope that he will not go away with the wrong impression. I would never get involved in any project or ask the Government to comment on any project. My question concerns the principle of Sport England saying that it should not take into account the relative wealth of those who were to receive the grants. It is a question of principle, really.

Lord Davies of Oldham: My Lords, I hear what the noble Viscount has said. I am merely emphasising that I am seeking to repudiate the main thrust of the amendment on the ground that informing the nation about the virtues of the lottery—where and how the money is spent and in order to have a public debate about the good causes—is important in improving the allocation mechanism. This current short debate on what I regard as a trivial point—although I recognise that the noble Lord has used an element of it to illustrate general principles—is part of the public debate on how the various distributors go about their task.
	I would like to reassure the noble Lord, Lord Clement-Jones. He will recognise this point as he should also have received a copy of the correspondence—the noble Lord, Lord Phillips, wrote to me about these issues and I replied explaining matters as we saw them. He was satisfied with that reply and wrote to thank me for making clear to him the reasons for the paragraph. I had thought that perhaps that degree of approval might extend beyond the noble Lord, Lord Phillips, to all his colleagues in the Liberal Democrat Party. It probably has extended to all his colleagues, apart from the spokesman from the Front Bench, but that is the way of the world.

Lord Clement-Jones: My Lords, clearly my noble friend Lord Phillips is a pushover. I do not recall having a copy of that letter. I have looked through my file of letters from the Minister, of which there are many and all of them greatly welcome, but I do not see a copy of the letter to my noble friend Lord Phillips.
	What is interesting about the Minister's reply, which he clearly took great care in putting forward, is that by and large it is completely irrelevant. It relates to paragraph (b) of that clause, almost entirely:
	"publishing information relating to the distribution of money under this Act or the expenditure of money distributed under this Act".
	I have no argument whatever with that subsection. I welcome the Minister's speech; I always welcome the Minister's speech where I possibly can. But, apart from maybe one or two sentences, he did not really address paragraph (c),
	"encouraging participation in activities relating to the National Lottery in general".
	He merely repeated what he said the last time, which was about the activities of the National Lottery promotions unit. He did not address the particular point that I made, about the drafting of that particular paragraph.
	We still have another stage of this Bill and I ask the Minister to take a further look at this issue. Rather than looking at completely the wrong paragraph, it would be helpful if he could look at paragraph (c) between now and Third Reading and see whether it has drafting flaws. I entirely agree that the distributors should be entitled to insist on National Lottery Day, with a National Lottery promotions unit and so on—there is nothing between us. What is between us is what that paragraph could be used to do, in terms of promoting, and participation in, the lottery. I do not believe that there is any point of principle between us, it is all about what the paragraph actually says. I see the Minister nodding and I take huge encouragement from that. I look forward to Third Reading and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Clement-Jones: moved Amendment No. 9:
	After Clause 11, insert the following new clause—
	"DISTRIBUTING BODIES: REPORTING
	After section 34(2) of the National Lottery etc. Act 1993 (c. 39) (annual reports by distributing bodies other than Millennium Commission) insert—
	"(2A) The report shall include statements—
	(a) the independence of funding decisions;
	(b) the principles applied to maintain the distinction between government expenditure and lottery funding; and
	(c) the proportion of funding that has been allocated to bodies (other than public bodies or local authorities) whose activities are carried out not for profit.""

Lord Clement-Jones: My Lords, at each stage of this Bill, one of the main areas of concern right across these Benches and the Conservative Benches has been the preservation of the principle of additionality and the best method by which this can be achieved. I do not intend to rehearse the arguments that have taken place both in this House and in the other place at various stages of the Bill, trying to elucidate what we mean by additionality.
	The Committee stage demonstrated that there is broad cross-party agreement on the need to adhere to this principle, even though, we must confess, there remains dispute over how it is best defined. Our concern on these Benches has consistently been that the Bill in its current form fails to safeguard the principle of additionality. We have been disappointed by the Government's resistance to all attempts to do so, both in the other place and in this House. Amendment No. 9 is a neat, convenient and practical way to ensure that attention is given by lottery distributors to the principle, yet it avoids the much-debated pitfalls involved in trying precisely to define the principle. For that reason, the word "additionality" does not appear in the amendment.
	In essence, the Government have reached agreement with the lottery distributors to report annually on additionality. We welcome the commitment from the Big Lottery Fund and the other lottery distributors to determine a policy and report on how they uphold the additionality principle. In the light of that, what were the reasons given by the Minister in Committee for refusing to enshrine those commitments in legislation?
	First, in Committee, the Minister stated that,
	"there is no need to require in the legislation that distributors report on how their decisions are independent of government. Distributors have always had that policy".
	But that is as far as it goes. There is no statutory obligation to ensure continuation of such a policy. The principle of additionality is of such importance as to warrant that it is safeguarded through statute.
	Secondly, the Minister said that it is,
	"bad regulatory practice to increase the volume of legislation on the statute book by putting into legislation something that can be achieved by other means such as, in this case, a voluntary agreement".
	On these Benches, we are all in favour of avoiding unnecessary bureaucracy, but that is no answer to ensuring at least a degree of protection of future lottery funds from the politics of the day. A voluntary agreement is simply not enough. All sides agree on the central importance of the principle, which we should see enshrined in the Bill.
	Thirdly, in Committee the Minister stated:
	"The wording, 'the distinction between core government expenditure and lottery funding', does not allow the flexibility for changes in ideas over time on what the Government should be funding".—[Official Report, 13/3/06; col. 1077.]
	But this amendment allows for flexibility. That is precisely the advantage of this practical approach compared with a definitional approach. As I said in Committee, this is not a straitjacket. In view of those arguments, I urge the Minister to rethink and include this vital amendment in the Bill. I beg to move.

Viscount Astor: My Lords, my name is added to this amendment, which is the result of the noble Lord, Lord Clement-Jones, and myself considering carefully what the Minister said in Committee and trying to come up with a sensible compromise amendment. The Minister will remember that in Committee we moved an amendment asking the Government, in effect, to define additionality, which was resisted by the Minister, as it had been in another place, on the basis that to do so in legislation might create a lawyers' paradise for arguments on how to define core government spending. A second amendment asked the Government to report on additionality. The Government resisted that on the basis that it was not their job and that they would end up having to define it again and that, again, we would be in a form of legal minefield.
	So we moved on. Very helpfully, the Minister said that the distributing bodies would report. As a result, we have received a helpful letter from the Big Lottery Fund, from which I shall quote because it is important. It states that it has,
	"broadly agreed:
	A common framework for reporting on additionality, which will comprise each Lottery Distributor's policy on additionality, including a common definition; how this informs the design of funding programmes and streams and how the concept is operationalised"—
	not a very nice word—
	"at grant giving level.
	A common definition of additionality [is] as follows 'Lottery funding is distinct from Government funding and adds value. Although it does not substitute for Exchequer expenditure, where appropriate it complements Government and other programmes, policies and funding'.
	Our Annual Reports should be the main vehicle for reporting on additionality".
	We agree with that and I think it is a very helpful statement from the Big Lottery Fund, supported by all other distributing bodies. As the noble Lord, Lord Clement-Jones, said, we need a safeguard in the Bill. As the noble Lord said, it allows for flexibility in the definition. It leaves it up to the distributing bodies to report; we are not asking the Government to do anything, so I hope that the Government will, this time around, be able to accept our amendment. We have listened to the concerns put forward by the Government and I think we have addressed them. I think the Government ought to be able to accept these amendments. The Minister knows that there are concerns over additionality; this amendment would go a long way towards solving those problems.

Baroness Pitkeathley: My Lords, I really cannot see the necessity for this amendment, although I congratulate the noble Lords on bringing an amendment to address the dreaded question of additionality without mentioning the word. They are to be very warmly congratulated on that. The amendment also seems to aim to check what proportion of money will go the voluntary and community sector. It also seems to have another crack at limiting what is already, in my view, very limited government influence. It is, in other words, something of a catch-all amendment in trying to do all those things.
	It is unnecessary because there are already safeguards in place. We have discussed the independence of decisions about funding at length and have, I hope, established that those decisions are always taken independently by lottery distributors, including the Big Lottery Fund. As we have heard, the Big Lottery Fund and the other distributors are already pledged to monitor and report regularly on the question of additionality, as they are pledged to report on how they will carry out their publicly stated commitment to ensuring that the voluntary sector receives between 60 and 70 per cent of the total sum. If they did not do that we can be assured that NCBO and other voluntary organisations would soon shout loudly about it. There are very heavy requirements for reporting already on lottery distributors, especially the Big Lottery Fund; they are very willing to meet and extend these requirements. To require them to do any further reporting would, in my view, risk their spending too much time reporting and not enough doing what they were set up to do: distribute lottery money to disadvantaged individuals and communities.

Lord Joffe: My Lords, this a rather gentle compromise amendment, imposing nothing on the Government, other than what they have already agreed to. It is just a question of reporting. This additional reporting would, I submit, bring transparency and clarity to the Bill, and has the potential to prevent misuse. For the reasons outlined by the noble Lord, Lord Clement-Jones, and the noble Viscount, Lord Astor, I support the amendment.

Lord Davies of Oldham: My Lords, I am grateful for the way in which the noble Lords who have pressed this amendment have addressed the issue. I agree that there is not a great deal between us. We have agreed that additionality should, in principle, be reported on. It will be recognised, as my noble friend Lady Pitkeathley so eloquently made clear, that the lottery distributors are prepared to ensure that they comment on this issue in their annual reports. I accept that the noble Lord, Lord Clement-Jones, and the noble Viscount, Lord Astor, have produced an amendment without some of the more obvious parts to which I objected last time, particularly the word "core" in relation to government expenditure. Therefore I am much closer to them in the terms of the amendment.
	I recognise the point that the noble Lord, Lord Joffe, makes. He is right to identify that there is not a great deal at stake at this present time, but it is still the case that we would be putting into the Bill a requirement to report. We continue to remain of the view that it is inappropriate to include a requirement for distributors to report on the amount of lottery funding that they award to not-for-profit bodies. The issue of not-for-profit is quite difficult, and it will not be easy for distributors to define it. For example, there is the problem of any grants that are made to social enterprises, because these often make profits but reinvest them in their services. Our policy directions to the other distributors all include that they should take into account the need to ensure that money is distributed for projects which promote public good or promote charitable purposes and which are not intended primarily for private gain.
	So we still think that this amendment has weaknesses, and we cannot accept it. With the existing measures that we have in place, to which my noble friend accurately referred, it is not necessary. But I recognise that the noble Lord feels so strongly about what I think is a marginal difference between us that he might press the matter. I do not think that that is necessary. If he will give me time to look at the matter further before Third Reading we shall do so. I cannot give him the assurance that I shall accept an amendment constructed in his terms, but we shall look at it and see if we can come out with a formula that bridges what I think is regarded in the House as a fairly narrow gap between the Government's position and his.

Lord Clement-Jones: My Lords, can I ask the Minister a direct question? Will he give an assurance that he will seek to bring back on Third Reading wording that reflects the undertaking that has been given by the Big Lottery Fund and the other lottery distributors about their reporting practices?

Lord Davies of Oldham: My Lords, that is a fair question. I can answer it categorically, yes—and I shall look at the matter in the context of that framework.

Lord Clement-Jones: My Lords, I thank the Minister for that very constructive reply. Indeed, he was entirely correct that we would have pressed the amendment to a Division without that assurance. But the assurance that he has given us is very solid and points the way forward to the voluntary sector in particular being very satisfied that that will be in the Bill when we come to the end of the Third Reading in a few weeks' time. With that assurance from the Minister, for which I thank him, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	Schedule 2 [New Schedule 4A to the National Lottery etc. Act 1993]:

Lord Shutt of Greetland: moved Amendment No. 10:
	Page 19, line 8, leave out "12" and insert "20"

Lord Shutt of Greetland: My Lords, this series of amendments addresses the regional dimension. I referred to this at Second Reading and again in Committee and I return to it today. Why? Well, first, regionalism worked with the Community Fund, and this is going backwards. It is even part of the strapline of the Community Fund, which is a decentralised organisation working in every part of the UK.
	Secondly, administrative devolution is to remain. We have been told that there are to be regional offices all over England, but regional governance is missing. Thirdly, there is no evidence that there has been any failure with the Community Fund under the existing structure. Fourthly, there is a concentration of power concerning well over £600 million. I believe that it is wrong to have such concentration of power in so few hands and that we should devolve that power within England. Fifthly, if the system is good enough for Scotland, Wales and Northern Ireland and, indeed, for the Isle of Man, Guernsey and Jersey, it is good enough for the English regions.
	I listened at the time and have had a chance to reflect on what the Minister said to me. At Second Reading I referred to the committee of the Big Lottery Fund being out of balance. Of its 17 members, three are from Northern Ireland, three are from Wales, three are from Scotland—indeed, one of the English members arrived from Scotland only in 2004—and all but two of the English members represent London and the south-east. At Second Reading the Minister said to me:
	"The noble Lord also mentioned the issue of representation. We are in an interim stage at the present time. The current arrangement is a temporary measure, and we intend to provide for the final Big Lottery Fund board to have 12 members: one member each to represent England, Scotland, Wales and Northern Ireland, the other members general UK members. I think that addresses what he regarded as somewhat over-representation of the communities of the United Kingdom and the under-representation of the regions of England".—[Official Report, 6/2/06; col. 500.]
	But the more I ponder that, the more I think that is the problem. Normally, when you get temps in, you do not make principles and policies. We have been told that the 17 are temps and that eventually we are to have 12 members, yet they are laying the plans. I am afraid that that has been the problem.
	In Committee I considered the regional dimension again. The Minister said to me:
	"Devolution to the regions of England is of course a different matter. While it is often a good thing for policy reasons, as the noble Lord will recognise, because he knows how much we have enthused about aspects of regional policy in this Government, there is no statutory framework".
	But that is why we are here. This is a Humpty-Dumpty Bill in that the Big Lottery was set up in 2004 and we are only now legislating for it, but legislation can make a statutory framework.
	The Minister continued:
	"We believe that decisions on how best to ensure that there is an English regional dimension to its work are best made by the Big Lottery Fund itself".
	But that Big Lottery Fund has been set up so that that does not happen. The Minister further said that,
	"the fund has decided it will not have general English regional committees. English programmes will be national".—[Official Report, 13/3/06; col. 1091.]
	My view is that it should be for Parliament and not the fund to decide that. I shall refer later in detail to the fund and its decision-making, but in my view it is for Parliament to decide whether that should be the case.
	The Minister further stated:
	"I hope the noble Lord will recognise that we have not ignored the regional element with regard to the structure of the fund, but we think a small focused fund concerned with strategy is right".—[Official Report, 13/3/06; col. 1092.]
	But this is not a small, focused fund; it is a huge fund. It has huge sums of money with a variety of programmes. Of course, committees are lined up for Northern Ireland, Wales and Scotland.
	It is easy to give crumbs to the Isle of Man, Jersey and Guernsey. Perhaps the civil servants assisting the board do not mind too much because it involves only a tiny sum of money relative to the whole, which would be excluded from their powers.
	I shall now consider the temporary board and its work. It these days of openness, the temporary board has placed some of its minutes and agendas on the internet. For example, five of the board agendas from October 2004 to May 2005 and eight of the minutes are on the internet. For some reason October 2004 is missing, but they go up to January 2006. March 2006 has not yet arrived on the internet, but I am not complaining particularly about that.
	I have no idea how many meetings were held prior to October 2004. There is reference to a meeting in September 2004, so clearly the board met earlier. The Minister said in Committee that the fund had decided that it would not have regional committees. I have been through all the minutes and see no reference other than one at minute 19.4 of 16 November 2004, which states:
	"It was commented that, during discussions, very little mention has been made of the English regions and their needs".
	So it remained. There is no information at the next or any other meeting. I have looked carefully through the minutes. In March 2005, minute 24.8(d) states
	"that the Board should debate the role of the Country Committees in the context of the Big Lottery Fund as a UK-wide organisation before the re-introduction of any draft legislation".
	The board was clearly interested in the legislation—and the issue was picked up again on 17 May, but there was still no reference to the English regions. It then decided to look at the committee structure. It got three from Northern Ireland, three from Wales, three from Scotland, one from England and the chairman and the vice-chairman to look at the structure. Is it any wonder that discussions got nowhere when there is no vested interest for the regions of England?
	On 19 July 2005 the chair highlighted the considerable officer time and effort involved in preparing the Committee stage of the Bill. There may have been officer time, but there is no reference in the minutes to the board considering the Bill or anything about the regions of England. The board was asked to note the report. One concludes that any work that has been done in this area has been done by lottery servants, not the board.
	Eventually on 15 November 2005 the board considered the country committees, and decided that it will have a committee of five in Northern Ireland, a committee of 12 in Scotland and a committee of six in Wales. England awaits. It clearly struggled with England, but eventually it decided on 17 January 2006 that there would be a committee of 10 in England. The board then scratched its head and thought that it had better have a committee of 10 in Scotland as well, as it could not have 12.
	It has placed eight separate sets of minutes on the internet, and it is clear that there has been no consideration of the English regions. It seems to me that that temporary committee has not been suitable for the purpose of looking at what is right for the regions of England. Indeed, it is not surprising in those circumstances—seeing that the noble Lord, Lord Barnett, is present—that they had a splendid Barnett formula carve-up of resources which, at a later stage, they reaffirmed.
	To conclude, the Minister says that it is not in the legislation. But that is why we have come; to make legislation. The Minister says to me, "It's up to the Big Lottery Fund. They can make their own arrangements". Well, they have not done so, not being set up or equipped to look at the English regions. We can and we should. I beg to move.

Baroness Pitkeathley: My Lords, I must disagree with the noble Lord about the Big Lottery Fund not considering the English regions. It is clear that they will have a strong regional presence with offices in nine English regions, whose primary role will be outreach work, and a national committee for the Reaching Communities programmes. Generally, the needs of the English regions will be looked at in considering all of the different programmes—some of them wide and strategic—that the fund is going to pull together. It also, for example, has ring-fenced funding for certain areas.
	So, while it may not be apparent from the minutes, I know from my dealings with colleagues in the Big Lottery Fund that they have given quite strong consideration to regional elements. No one would dispute that that is entirely right; there should be a strong regional presence. Perhaps the noble Lord, Lord Shutt, is actually talking about regional decision-making on funding. I suggest that that has problems, though it is a beguiling thought. The Community Fund had many problems with it in practice, in terms of costs and inconsistent decision-making, and the dissatisfaction with that. I submit that the arrangements that the BLF is making to consider the needs of English regions are adequate and will become even stronger as their programmes roll out.

Lord Davies of Oldham: My Lords, I am grateful to the noble Lord, Lord Shutt, for the way in which he presented this amendment—although it is expressed in similar terms to the amendment that we had in Committee and the debate that we had then. I appreciate that he raises some interesting questions about the way devolution is reflected in the plans for the Big Lottery Fund, about the dynamics of the board and about the way in which grants will be distributed. I am also grateful to my noble friend Baroness Pitkeathley for identifying to him some of the difficulties which might occur if his amendment were to become part of the Bill.
	I listened to the noble Lord's arguments carefully but I have not changed my position, which I have no doubt that he will regret. The Bill currently provides for 12 board members, four of whom are appointed to represent the interests of parts of the United Kingdom. Those representatives will have an important part to play in chairing committees that will oversee devolved expenditure in the four parts of the United Kingdom. The National Lottery is, of course, a reserved matter; however, the areas covered by the Big Lottery Fund good causes—health, education, the environment and charities—have all been devolved. We have reflected that in the Bill. By creating the concept of devolved expenditure and providing for the committees to oversee spending, it ensures that decisions will be taken by those best placed to make them.
	As I said in Committee, devolution to the regions of England is a rather different matter. It raises the difficulties to which my noble friend Lady Pitkeathley gave voice. Desirable as it might be for a whole host of reasons—and nobody is better equipped to identify them than the noble Lord, Lord Shutt, or to make the case for them with his usual forceful clarity—there is no statutory framework as there is with devolution to the countries of the UK. He will recognise that factor and, because of it, there is no specific provision within the Bill to reflect it. We believe that decisions on how best to ensure that there is an English regional dimension to its work are best made by the Big Lottery Fund itself. Why should the Government force a particular model on the fund? How would that sit with the concerns expressed today, and even more intensely in Committee, about the overall degree of government control of the lottery?
	I have concerns about increasing the size of the Big Lottery Fund board so drastically. It is a fairly substantial change that the noble Lord, Lord Shutt, is recommending. The fund needs a UK board that is small and focused enough to provide a real strategic focus to its work. Having nine English regional appointees, as well as the four national-interest appointees, would risk creating a sort of mini-parliament rather than a coherent board.
	When the noble Lord, Lord Shutt, spoke equally forcefully in Committee, he made the point that the Community Fund had English regional committees, whereas the New Opportunities Fund did not. He reiterated that point today. He saw that as evidence of a New Opportunities Fund takeover. I do not accept that at all. The Community Fund had no statutory duty to set up English regional committees; it chose to do so as the most effective way to operate. It is entirely open to the Big Lottery Fund to act similarly. We believe that that is a decision for the fund itself; it is not a decision for the Government to make and to put on the face of the Bill. The Big Lottery Fund, of course, will operate in a somewhat different way from the Community Fund and the New Opportunities Fund. Sometimes the focus will be at national strategic level and sometimes at regional or even local level.
	Against that background, I understand that the Community Fund and the New Opportunities Fund, operating as the Big Lottery Fund, have decided against general English regional committees. They are in that position at present. The fund has said that it will have English regional representation on the national committees for individual funding programmes where that is appropriate. For example, its Reaching Communities programme will have representatives from each of the nine English regions because it is seeking to be in close contact with the regions. That will allow for regional perspectives to be brought into the decision-making process. The noble Lord will recognise that decisions are being taken that increase the regional dimension. The fund will also have a regional office in each of the English regions, whose primary role will be outreach work. The offices will spend time gathering regional intelligence, which will be fed into the assessment process.
	I hope that the noble Lord will recognise that the regional dimension is not being ignored. Where appropriate, arrangements will be made. We should leave the Big Lottery Fund to take up the decisions as appropriate, which has been the case in the past, but we cannot agree that we should put on the face of the Bill a rigid structure that, as the noble Lord, Lord Shutt, indicated, would in his terms advance the regional dimension, but might be, crucially, at the cost of the effectiveness of the overall strategic role which the fund has to fulfil. Of course, we have met the devolution dimension as regards the four countries of the United Kingdom. That is as far as we can reasonably be expected to go in legislation. I hope the noble Lord will consider that an adequate reply.

Lord Shutt of Greetland: My Lords, I thank the Minister for his response and I thank the noble Baroness, Lady Pitkeathley, for her interjection. She said that there were problems with the Community Fund, and that is the first time that those words have been uttered in this House. In Committee, I invited the Minister to say whether there had been any problems and none was offered. In Yorkshire, all I have heard is tremendous respect and support for what that regional committee, which was responsible for the Community Fund, did in Yorkshire.
	If it is the Big Lottery, it can have a big board. I do not believe that a board of 17 or 20 makes any difference; it is still on the large side. Plenty of organisations have a board of that size; a board of 20 is not overwhelming. The problem is that the 17 have been chosen—no doubt chosen for good motives regarding representation from Scotland, Wales and Northern Ireland—but, bearing in mind the metropolitan nature of the English people who were chosen, only two could be said to be provincial in English terms. Therefore, there is not a sense that that group of 17 has said, "Ah, this is the way that we will organise ourselves". The 17 have been put there in that way so as not to come up with a regional solution.
	The other important point is that the Minister says that the board have decided against, but there is no evidence whatever that proper consideration has been given. The only minute is that which says:
	"It was commented that, during discussions, very little mention had been made of the English regions and their needs".
	It was not even picked up at the next meeting. There is no suggestion that they ever looked at the English regional dimension.
	However, as the Minister said, I may well withdraw. I need to think about this, have another look at his response and see if circumstances are right on another occasion to garner a majority. For the moment, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.
	[Amendments Nos. 11 to 13 not moved.]
	Clause 14 [Functions]:
	[Amendment No. 14 not moved.]

Viscount Astor: moved Amendment No. 15:
	After Clause 19, insert the following new clause—
	"REPORT OF INTERNATIONAL EXPENDITURE
	In section 34 of the National Lottery etc. Act 1993 (c. 39) (annual reports by distributing bodies other than Millennium Commission) after subsection (2) insert—
	"(2A) The report shall set out any awards made during that year for projects outside the United Kingdom.""

Viscount Astor: My Lords, in Committee I moved a similar amendment, because I was unable to discover by looking at the Community Fund website the nature of its grants to international projects. The information that I did discover was confusing and contradictory.
	The Minister has been very helpful since and has sent me an accurate summary of the grants that have been handed out from 1997–98 until last year. Indeed, in his letter he wrote that he would like to clarify that the Community Fund already includes details of its international grants programme in its annual report and that the Big Lottery Fund will continue to include it in future reports.
	I have also had a letter from the Big Lottery Fund, saying:
	"I can assure you that we will report clearly"—
	which is important to add—
	"in our annual reports and accounts the amount of funding that goes to international projects".
	I am grateful for that, because the report that came out of the Community Fund was far from satisfactory. I am going to move this amendment to allow the Minister to repeat that assurance, and I assure the Minister that he can be as brief as he wishes in repeating that assurance. I am grateful for the help that he has given me on this issue. I beg to move.

Lord Joffe: My Lords, I was going to oppose this amendment, but as I am absolutely sure that the Minister will be able to give a suitable reassurance about the information, which I have found is already there, I have nothing further to say.

Lord Davies of Oldham: My Lords, we have made great progress since Committee. Once again, I recognise my debt to the noble Lord, Lord Joffe, who spoke on that occasion and helped greatly in identifying the real issues at stake.
	I confess that I am sorry about the difficulties of the noble Viscount, Lord Astor, with the figures and that he has identified some inconsistency. I am afraid that the annual report can only provide a snapshot at the time of expenditure. The amounts paid out may vary slightly from the awards made, for reasons that all of us would recognise with such grants. There are some minor difficulties with the accounts, but, as the noble Lord, Lord Joffe, indicated, not such as to occasion great anxiety about the way in which these programmes are managed.
	I want to give the noble Viscount, Lord Astor, the assurance that he seeks—these figures will be carried in the annual report as accurately as they can be made at the time. We have nothing to hide. The lottery has nothing to hide. The one case of some anxiety that we discussed in Committee did not have too much substance. With that, I hope that the noble Viscount will think that I have given him the reassurance required.

Viscount Astor: My Lords, I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Bananas

Viscount Montgomery of Alamein: rose to ask Her Majesty's Government whether the new European regime for the import of bananas is in the best interests of the United Kingdom.
	My Lords, we move to the vexed question of bananas. I am extremely grateful to the noble Lord, Lord Grocott, the government Chief Whip, for allowing me time for this debate in a crowded programme; and to the noble Lord, Lord Bach, for making himself available to answer it.
	As this is an Unstarred Question, I have no right of reply, so I thank the various noble Lords who will speak in this short debate. Not all of them are quite here at the moment because it is taking place rather earlier than expected, but no doubt they will turn up. Some of the key figures are here, however. I have taken a few soundings in advance, and know that all the speakers will disagree entirely with what I am going to say. That is not an unusual state of affairs. I have been interested in bananas for a long time, and have always irritated the Front Bench of the day about it. I am returning to an issue which I used to pursue in the 1980s and 1990s.
	The dispute over the tariff for banana imports into the EU has not yet really been resolved. It goes back 13 years to the early 1990s, when the EU decided to regulate the market for imports. This regulation comprised a complex system of quotas, tariffs and licences designed to protect former colonies in Africa, the Caribbean and the Pacific—known as the ACP territories—against the Latin American bananas coming from what the Americans call the most favoured nations, or MFNs, referring to the Latin American producers in central and south America.
	Following a great deal of agitation from Latin America, led by Ecuador for south America and Costa Rica for central America, the WTO decided, quite rightly, that the EU system went against the principles of free trade. As part of the solution, it was agreed in 2001 that a tariff-only system of import controls should be put into effect from 1 January this year. Meanwhile, various interim measures were introduced which allowed the ACP countries to continue with a zero tariff for 750,000 tonnes per annum, and for Latin American bananas—which account for 60 per cent of EU imports—to pay E230 per tonne, as against the E75 originally agreed. Not surprisingly, as I am sure noble Lords will appreciate, the Latin American countries objected and, last year, a series of arbitrations ensued which tended to agree with the Latin American view. This has so far merely had the effect of reducing the Latin American tariff to E176 per tonne, while maintaining the zero tariff for the ACP quota. I have to admit that that does not seem fair, and I do not see how anybody could argue that it is.
	At the WTO summit in Hong Kong last December, the EU appointed the Norwegian ambassador to use his best endeavours to resolve the problem. There, as far as I know, the matter more or less rests, although I believe that there have been various interim measures in an attempt to protect the ACP countries' trade. So, once again, we have the EU, principally led by France, operating in a protectionist mode against the interests of consumers in general and, of course, Latin American producers in particular. "Free trade" means—or should mean—what it says. Indeed, the main purpose of the World Trade Organisation is to ensure that this happens. Unfortunately, so far it has not.
	The case for the ACP subsidy is usually based on the notion that if the small islands cannot produce bananas competitively they will turn to drugs. This is a specious and ridiculous argument at any time, since the production and illegal trading of drugs will always be infinitely more profitable than almost any other crop in the world. That is not a substitute for bananas. It would be the wrong kind of substitute. I am sure that there are other things that can be done in the Caribbean if necessary to support their industries and people. That is up to the individual countries concerned, but it should not be imposed on the world in general.
	My Question is to ask the Minister where we now stand, and to seek his confirmation that UK interests are best served by importing the best quality bananas from the most efficient source.

Lord Faulkner of Worcester: My Lords, I apologise to the noble Viscount for missing the first few seconds of his speech. The House got on to this debate very early and I was in Committee a little way away. I hope he will forgive me. However, I did hear the main part of his speech.
	It is over 15 months since we last debated this subject on a similar Unstarred Question asked by the noble Lord, Lord Newby. I am delighted to see him in his place. I was going to say that I was the only person to have spoken in both debates, but I assume that the noble Lord is standing in for the noble Baroness, Lady Miller of Chilthorne Domer, so he and I will be veterans of both campaigns.
	I declare the same interest that I did on that occasion. I was vice-chairman of the All-Party British-Caribbean Group, and an adviser over 25 years to the Fyffes Group in my business life before I joined your Lordships' House seven years ago. It is also relevant to report that I paid a visit to the banana growers of St Lucia in the Windward Islands under the auspices of the Commonwealth Parliamentary Association in May last year.
	The noble Viscount said that he would probably be a lone voice putting forward his point of view. I cannot speak for anyone else who will take part in this debate, but his surmise about what I am going to say is absolutely right. I speak as a friend of the Caribbean, which has been treated shamefully by the World Trade Organisation, the multinational Latin American banana exporters, and particularly the United States Administration.
	To some extent I exempt from this criticism the EU Commission, which has attempted to maintain a tariff structure which would give some protection to the African, Caribbean and Pacific countries which supply bananas to the European market. It was not its fault that the United States mounted trade sanctions against Europe at the behest of its multinational companies, which have substantial interests in Latin and south America even though not a single banana is grown commercially on the US mainland. As a result of attempting to accommodate the multinationals' bullying, the EU has tried to compromise with a new banana import regime, which—as often happens with so many compromises—satisfies virtually no banana-exporting country, whether Latin American or ACP.
	What we are stuck with now is a flat-rate tariff with no limit on import volumes, and preferential access for 775,000 tonnes of ACP imports. The EU had to agree to a tariff-only system as the price of ending the dispute in the WTO. But it said at the time that the new single tariff was intended to have the same effect on the market as the system of tariff quotas that it would replace. The system could have worked if the level of tariffs on imports from Latin America—the so-called most favoured nation suppliers—was set high enough to prevent the European market being flooded by bananas priced at such low levels that the ACP exporters could not compete with them.
	Originally the Commission said that the single tariff should be E230 on all MFN imports with no quota limit. This was thrown out in arbitration and a second proposal of E187 was put forward. The arbitrator refused to agree to that, saying that the Commission had not demonstrated that E187 would meet the required criteria. The Commission off its own bat then fixed the level at the still lower amount of E176.
	When I was in St Lucia last year, I asked the banana farmers and their representatives whether they agreed that the original figure of E230 would have been of sufficient value to keep them in business. Not one of them did. The banana growers who I met believed that a significantly higher level of tariff, perhaps as much as E300 per tonne, was required to prevent retail prices for bananas in Britain falling to levels that would make it uneconomic for them to continue to supply the market. Therefore, we can imagine how far E176 falls short of what is required. The farmers told me that their return has been falling steadily over recent years, not least because the cost of their inputs, particularly fertiliser derived from oil, has risen but the retail price of bananas in Britain has been falling steadily. It has fallen by 25 per cent in the past three years as a natural consequence of a world over-supply of bananas. The Windwards are, of course, treated less favourably than their immediate neighbours, Martinique and Guadeloupe, which, as overseas departéments of France, qualify for deficiency payments from the EU. Often they amount to over half their total returns.
	In the debate in your Lordships' House on 14 January last year, my noble friend Lord Evans of Temple Guiting, replying for the Government, suggested that diversification could be part of the solution for the Windward Islands. I discussed that with a number of the people I met, and it was clear that the scope is pretty limited. St Lucia operates a zero-tolerance policy towards drug production and trafficking, but there is worrying evidence elsewhere in the region that the ease of growing ganja creates just too great a temptation for some poor, previously banana-dependent island economies. I take issue with the noble Viscount, who said that that is just tough and they must try to do something else. I should say that the noble Lord, Lord Palmer, who cannot take part in this debate, was particularly keen that I should make this point about the risk of drug-growing as the alternative to bananas if the banana industry is damaged.
	It is clear that the islands' economies face catastrophe if any new EU banana regime effectively excludes or severely reduces fruit from traditional ACP sources. This is not scaremongering or crystal-ball gazing. There are already worrying signs that since the new EU banana regime started on 1 January, imports from Latin America are up by over 6 per cent, despite some supply problems caused by bad weather. Only last week the online news service for the fruit and vegetable trade—freshinfo—reported that the new regime had brought Guatemala back into the EU trade after several years' absence with the arrival of 113,712 boxes of Lola-branded fruit into Rotterdam. That was the first instalment of 8 million cartons of bananas which will come to the EU this year. Not surprisingly, this is upsetting exporters from Ecuador as Guatemala and, indeed, Brazil are undercutting their prices by some E3.50.
	Faced with this, it is hard to see the traditional Caribbean growers even getting to the starting line, and the situation would be even worse if the lobbying from Latin America to get the tariff even lower were to succeed. To go back to the terms of the noble Viscount's Question, how can the new European regime for the import of bananas be in the best interests of the United Kingdom if it produces the destruction of the banana-growing industry in Commonwealth countries—with which we have the closest ties—the exclusion of the exquisitely tasty, conveniently-sized fruit from the Caribbean in favour of what my wife and I regard as the large, cheap and nasty bananas from Latin America, and yet more price wars between British supermarkets to the further detriment of the smaller greengrocers and convenience stores? If ever there were a num question—one that expects the answer "no"—this is it.
	I hope at the very least that we shall receive an assurance from my noble friend that the Government will follow the example of their predecessors and fight to keep alive the Caribbean banana industry, specifically in the first instance by doing all that they can to obtain a satisfactory level for the single tariff and ensuring that there is no change in the way in which the quota is administered, at least before 2008.

Lord Foulkes of Cumnock: My Lords, my noble friend Lord Montgomery and I usually agree on almost everything—strangely, considering our different backgrounds and the other differences that we have. However, I am afraid that I do not agree with him today. Like my noble friend Lord Faulkner, I have interests to declare, but on both sides. I am president of the Caribbean-Britain Business Council, vice-chairman of the Caribbean group in Parliament, vice-chairman of the Central American group and chairman of the Dominican Republic group, so I see both sides of the argument—a fatal thing for a politician sometimes.
	I see the argument that we should be moving towards free trade, but I must say to the noble Viscount that, at the same time, we must protect vulnerable countries, especially the small Caribbean islands whose economies have been so dependent—and remain so dependent—on bananas. There need to be helpful transitional arrangements. That is what the European Union has been trying to achieve. Like my noble friend Lord Faulkner, I commend what the Commission has been doing. It has been working extremely hard to try to square the circle in this very difficult situation where we must try to resolve genuine interests from Latin America as well as from the Caribbean.
	The European Union thought that it had found an acceptable solution, but it was challenged by the Latin American countries—the Central American countries in particular, as my noble friend Lord Faulkner pointed out. According to reports, Honduras, Panama and Nicaragua are threatening further legal action at the World Trade Organisation. Colombia, Costa Rica, Guatemala and Ecuador have been trying to establish a monitoring framework within the European Union with the object of demonstrating that their interests have been hurt. I hope that I will show today that they have not been hurt. However, Latin American bananas are mostly produced and marketed by big American companies such as Del Monte. The noble Viscount shakes his head, but I am not going to be critical—quite the reverse. Among Latin producers, marketers and distributors, Del Monte has made it clear that it supports the EU tariff-only regime at the E176 per tonne level. On 30 November 2005, its chairman noted that Fresh Del Monte Produce Inc was,
	"well-positioned to take advantage of its vertically-integrated production, outstanding quality, a shipping, distribution, sales and marketing network to more effectively compete in the EU banana market with an open-market, tariff-only system".
	If it is good enough for Del Monte, I do not understand why it is not good enough for the governments of Central American countries.
	Let us look briefly at the market share. In Europe's original 15 member states, 18 per cent of bananas are produced domestically—which is a little misleading because we include the Départments d'Outre-Mer in that. Some 63 per cent come from Latin America and only 19 per cent from the ACP in the traditional 15 countries. Of course, with the new member states, about 98 per cent come from Latin America so even more come from Latin America in those countries. Latin America is doing pretty well.
	Overall, Caribbean banana exports to Europe have been falling. In the four years to 2003, EC figures indicate that Caribbean banana exports fell by 7.6 per cent, so that they now account for only 36 per cent of total imports from ACP countries. The decrease has been especially marked in the case of the Windward Islands—very small vulnerable economies that we, as the main country in the Commonwealth, should have some concern for—with exports in the Windward Islands falling by as much as 50 per cent. That is in contrast to those of the Dominican Republic. I welcome what has been happening in the DR, which, over the same period, increased its exports to the EU by 159 per cent, so that it now accounts for around 14 per cent of all ACP banana exports to Europe.
	Perhaps I may touch on the implications of the new regime for ACP producers in the Caribbean. They pay once they have sold 775,000 tonnes—the tariff-free quota. They then pay the full duty rate beyond that. Some lower cost ACP countries, particularly in Africa, can afford to incur duty payments on part of their exports and still secure a remunerative return overall. But, without certainty of duty-free entry on their exports, there is concern in the Windward Islands and Jamaica that their trade will collapse. If it were to collapse the economic consequences would be dire. There is deep concern in those countries over suggestions that the whole of the ACP quota should be allocated on a first-come first-served basis. Someone has described what will happen as a boat race, with boats racing each other to get to the European Union markets first. That may be to some extent an exaggeration, but I think it indicates what could happen.
	As part of the negotiation of economic partnership agreements, European Commission negotiators are quietly urging Caribbean negotiators to seek quota-free entry for bananas and, indeed, for sugar in order to achieve something close to the equivalent of the "Everything But Arms" arrangements for the world's least developed nations. If that were to happen, it would effectively end the all-ACP banana protocol. It would also enshrine within a Caribbean EPA any new arrangement on bananas that some senior EC trade negotiators believe will be immune from any challenge. That certainly would be welcomed in the Caribbean.
	What happens now is far from clear. Lots of studies and options indicate different patterns of what might happen if we move forward on various scenarios. However, what unfortunately seems certain is that the losers will be the most vulnerable producer countries in the Caribbean. In contrast, the survivors, assuming some form of tariff protection of quota remains, will be those that have been able to enhance competitiveness, to diversify and to find higher-value market niches in fair trade bananas and organic bananas. All credit to them, because some of the Caribbean countries have been doing that effectively. But countries like Jamaica and Belize, where bananas and sugar grow side by side, will struggle to maintain a stable rural economy in the face of any new banana tariff regime, as envisaged by my noble friend Viscount Montgomery. The 36 per cent cut in the price paid by Europe to ACP sugar producers over the next three years will make it even worse: I do not like this phrase—a double whammy on these vulnerable economies.
	The Caribbean is in the process of restructuring—I know that well and I will turn to one aspect of that in conclusion—so that the newer economy of tourism and services can be better integrated. But that will take time. I think that, and I hope the Minister will agree, Europe and particularly the British Government have a responsibility in ensuring Caribbean stability. Without that the levels of narcotics and gun-related crime—and, I say to my noble friend Lord Montgomery, that is not an idle threat—on British streets will rise. That will happen.
	I am off to the Caribbean tomorrow. I left that to the end because if I said it at the beginning it might colour noble Lords' views of my remarks. I am looking forward very much indeed to being an observer at the UK-Caribbean Forum where our Ministers will be participating with Ministers from Caribbean countries. I hope that—and I say this to the Minister—I can take a message of some hope for the future from the United Kingdom Government and the United Kingdom Parliament.

Baroness Hooper: My Lords, I am most grateful for being permitted to speak in the gap. I am in the happy position of being able to speak as the debate has been brought forward; the time originally envisaged for it would have made that impossible.
	I have listened with interest to the concerns expressed about the effects of the European Union regime on the producers of bananas. Having spoken up for the interests of Latin American producers in the past, and having spent a postgraduate year in Ecuador, I can assure the noble Lord, Lord Faulkner of Worcester, that the bananas produced there are great in variety and absolutely delicious. Noble Lords must go there and try them out on the spot. More recently, I visited St Lucia, Grenada and Antigua under the auspices of the Commonwealth Parliamentary Association, and I want to make a rather more general point. This is a question not only of the European regime or of bananas as a fruit, although I believe they are the most eaten fruit in the world and have all the qualities that the noble Lord, Lord Faulkner of Worcester, listed, but of finding ways to diversify the consumption of the banana and its by-products in order to provide a greater market for the producers wherever they produce this commodity.
	Small producers everywhere, but particularly in the Caribbean, have a special case. Many of them used to produce sugar, but the effects of the sugar prices and, indeed, the European Union sugar regime, among other things, meant that they chose to diversity into bananas. They have a particular problem because of the climate—we are all aware of the hurricanes that caused havoc in some of those tiny islands last year—so they need to be able to produce a crop that can be planted and reproduced within a short time if it is destroyed one year. Both sugar and bananas fall into that category. There is a special case to be made, which is why I urge consideration of further ways of using the banana. Like sugar, which is now finding another market in ethanol production as an energy source, bananas as a fruit could certainly produce some kind of energy source. A use could presumably be found even for the by-products of the banana—the foliage and the fibre, which are currently simply burnt and wasted and add to environmental problems—as a biomass source of fuel. I therefore ask the Minister to say, when he replies, whether the Government can in any way urge the European Commission's Research Directorate, not its Agricultural Directorate, to set up some form of research into alternative uses for the banana and its by-products.
	At a recent CPA meeting here—perhaps the noble Lord, Lord Foulkes of Cumnock, will come across this when he attends his meetings in the Caribbean tomorrow—there was a suggestion that a research committee or research council should be set up in the Commonwealth, and particularly in the Caribbean, to look into this issue.

Lord Newby: My Lords, I should begin by apologising on behalf of my noble friend Lady Miller of Chilthorne Domer, who I understand is, as we speak, pulling into Paddington Station, believing that this debate was going to take place somewhat later in the evening. However, I am delighted to be able to step metaphorically into her shoes in that I initiated the previous debate on this issue a while ago. I also declare an interest as a former adviser to the Caribbean Banana Exporters Association. Therefore, the noble Viscount will not be surprised to know that I, too, disagree with his basic thesis on bananas.
	The debate raises a number of general issues and I am grateful to the noble Lords, Lord Faulkner and Lord Foulkes, for having filled in many of the details, unsurprisingly none of which I have to my fingertips just at the moment. It seems to me that the issues are as follows. First, will the new proposed banana regime have a serious, deleterious effect on the Caribbean banana market? It seems to me that, for all the reasons that have been given, the answer is unambiguously, yes, it will.
	Secondly, does that matter to any significant extent to either those Caribbean economies affected or to the UK? We have already heard why it matters to those economies. The islands that we are talking about—particularly the Windward Islands—are very small. Their population is barely the size of a London borough. They have been encouraged by this country over a long period to grow bananas. Interestingly enough, the Caribbean banana business was begun by a subsidy from Joe Chamberlain when he was in one of his more exuberant pro-Empire modes. It is funny how things change. But there is no doubt that for those countries which still grow bananas, the effect on the economy will be very serious indeed. The choices open to them are, in the short term, relatively few. Take a country like St Lucia. It cannot grow any other commercial crop, virtually at all, and never will be able to, for reasons which have been given. The terrain and the regular hurricanes mean that most crops are impossible to grow.
	While St Lucia is doing a tremendous amount in terms of developing its tourist industry, this takes a long time and it is by no means clear that a monoculture of tourism is going to be an entirely satisfactory outcome for the island either, given that most of the income generated by tourism rapidly leaves the island and does not filter down to people who are not working in the tourist industry. The effect on the economy will be serious.
	Another effect which has been mentioned is what will happen to people who are now growing bananas. Will they turn to growing drugs? The noble Viscount, Lord Montgomery, observed that they could have been growing drugs anyway because it is more profitable. That assumes that the banana growers are amoral and that they would equally grow drugs as grow bananas. That is grossly unfair to the population of the Caribbean, who are not amoral and who do not want to be growing drugs—they know the effects of drugs just as well as we do. But some of these people will be desperate. They are poor people already; they will become poorer and will turn to desperate measures—both in my view and in the view of many other independent commentators, not just here but from the US.
	The effect therefore on the Caribbean economies will be serious and the social effects, both there and here, will be serious. Does that matter to us? It matters on two grounds. First, there is the question of moral obligation, which has already been mentioned, and which we cannot wash away. But it also raises a broader issue about the way the WTO acts, particularly in relation to small, vulnerable states. Whatever we do for Caribbean bananas, in terms of their access to the EU market, will have a marginal effect on the overall global banana market. As we have already heard, the percentage of the European market that in any foreseeable future will be taken up by Caribbean bananas will be small—single digits and reducing. The key issue that the WTO should address and has not addressed and our Government could urge it to address, is whether—in cases where there are small states who are not wealthy and which, for various historical reasons, have a special monoculture or a small group of products which form a small part of the market, the withdrawal of which would form a collapse in the economies—there is room for a waiver of normal WTO rules, at least on a limited basis and possibly on a diminishing basis, over an agreed period of years.
	Undoubtedly, the complainants in the WTO case, who have won their case and in doing so will destroy the Caribbean banana trade, have played by the book. I am sorry to say to the noble Viscount that they are immensely wealthy, extraordinarily effective and unscrupulous lobbyists in the States and elsewhere, which is, in one sense, neither here nor there. They have played, and won, by the book. The trouble is that the book is wrong in that respect. We should look at the book to see whether it can be amended, because we are now going into the ludicrous situation which noble Lords have mentioned.
	I am not sure how readily the geography comes to mind. But, thinking of the Windward Islands as a string of pearls, they are a French colony, a former British colony, a French colony and a former British colony. The French colonies get continuing protection, the British colonies get virtually none. Even going down the Windward Islands, the effect is discriminatory, bizarre or irrational and defies all logic. The one slight glimmer of hope, which the noble Lord, Lord Foulkes, said, is that some of these countries are growing organic and fair trade bananas. They are not the only ones who are doing it, and they should possibly have done that rather earlier. It was considered, but it did not happen. As we are always telling ourselves we must do, it gives them the chance to go up the value chain slightly.
	The real problem is that, without a more or less guaranteed volume of trade, particularly from the smaller islands, there will simply not be the shipping to deal with a slowly declining volume. The whole thing tends to fall off the edge, probably at a level of exports which is not much less than we have today. This is an important issue, which bears heavily on our responsibilities. It raises broader issues on how world trade will be carried forward. I look forward, as do other noble Lords, to the Minister's reply.

Baroness Byford: My Lords, I thank the noble Viscount, Lord Montgomery of Alamein, for introducing this debate. I believe that he will find that there are not many noble Lords who support his point of view, but it is good to debate it. For once, I have no interests to declare, which for me on agricultural matters is wonderful. In fact, I do not eat bananas either—when I was a little girl, they did not agree with me. As a sports person, I was told that I should eat them. Unfortunately, that was not possible.
	I do not propose to go over the ground which has been so well covered today. I have all the facts and figures, but it would be foolish for me to waste the time of the House going over what has been clearly put by noble Lords who have spoken already. I echo the noble Lord, Lord Faulkner, in his comment that the ACP countries have been treated shamefully. The noble Lord, Lord Newby, has underlined that it is even more unfair because of the position with the French colonies.
	I should like to take us further on. This debate has been going on for a long time and I want to raise several issues with the Minister. In January 2006, the organisers of the Second International Banana Conference proposed that the EU use the tariff revenue help fund to act and give more sustainable practices in all banana exporting countries. It made the following proposals: first, that the EU undertake a comprehensive evaluation of the existing EU banana import regime and its impact on poverty, income, wages, the environment and levels of development in all exporting countries, incorporating a gender analysis of these. Secondly, it proposed that the EU should support public programmes in producing countries to enforce international and national labour standards. Thirdly, the EU should fund and implement research and development programmes to improve occupational health and safety and environmental impact in banana production—something to which my noble friend Lady Hooper referred. Fourthly, the EU should fund and implement research and development programmes to find effective measures for preventing occupational and environmental risk in banana production. At this stage I began to wonder what on earth was meant by this, so I shall listen to the Minister with great interest. Fifthly, the EU should implement education and empowerment programmes in health and safety and environmental issues for workers.
	Sixthly, the conference proposed that the EU should fund and support initiatives promoted by not-for-profit, fair trade organisations, which facilitate small and disadvantaged producers' market access. Intervention programmes could include expertise or technical support; structural investments for improvements in production capacity; and the promotion of cultural initiatives to increase the awareness of consumers in northern countries. Seventhly, the EU should support and promote programmes ensuring fair contract and access credit for all producers. Eighthly, the EU should support and promote producer-led programmes that aim to help small farmers increase their productivity, cut their costs and engage in environmentally friendly production. Ninthly, the EU should initiate and financially support consumer education campaigns to increase consumer understanding that prices should promote sustainability. In other words, the EU should ensure that the social and environmental costs of banana production are covered, including living wages and decent livelihoods for workers and small producers.
	The conference's tenth proposal was that the EU should support financially and politically the creation of an international multi-stakeholder forum on bananas to tackle social, economic and environmental issues within the industry. Eleventhly, the EU should develop a proposal for differentiating tariffs on the basis of social and environmental criteria put forward by the conference organisers and look into trade barrier elimination and trade incentives for social compliance. Twelfthly, the EU should fund compensatory financial mechanisms for producers to help them meet the short-term price shocks and declining incomes which may result from EU market liberalisation. Finally, the EU should fund and support diversification programmes and initiatives of producer and/or worker groups which aim to replace current production and/or development of new markets or outlets for products, including where the workers have taken over production on plantations abandoned by companies.
	That is a big list. This conference was held in January. I hope that the Minister will be able to tell us a little more about it, because we need to move on. I have some questions on the above. How much money has been put aside to take some of these proposals forward? Has a separate body been established to manage these initiatives? If so, what timetable is in place? What input do the Government have into these discussions and the actions that I hope will result from them? Obviously, the Conservative Party's position is to believe in free trade in preference to barriers. However, I personally believe that we have a responsibility to former ACP countries and we should look at some of these proposals to see what we can do to move this agenda forward. My noble friend quite rightly raised the question of change in the sugar regime. It is a double whammy and it will be a very serious one for these countries.
	Although I have not agreed with the noble Viscount, Lord Montgomery, I thank him most sincerely, because this debate has given us a chance not only to reflect on where we are but to ask where we are going and what we can do to be effective. In that circumstance, I thank him most sincerely.

Lord Bach: My Lords, I begin by thanking the noble Viscount, Lord Montgomery of Alamein, for initiating and introducing this debate on the new European regime for the import of third-country bananas. I also thank other noble Lords who have contributed so knowledgeably to the debate and, if I may say so, spoken with so much passion on this topic. I thank particularly the noble Lord, Lord Newby, who stood in at such short notice and spoke with such skill, which is not something easily done without a moment's preparation. But we are lucky that he is such an expert in this field. He opened a debate on this topic last January.
	As one could feel tonight, in this debate, in WTO terms the banana trade has had a troubled history. As has rightly been acknowledged, one cannot meaningfully assess the new regime for imports and its significance to suppliers, traders and consumers, without looking back, particularly at the legal framework. The EU regime for bananas did not come into being until 1993, individual member states having often had very different trading histories. Even after 1993 there followed years of well publicised and damaging international trade disputes, as first one import regime and then another was challenged and found wanting in WTO. It was not until 2001 that an understanding was reached at the Doha ministerial conference. That understanding provided for a phased transition away from the quota system, which had attracted so much criticism from exporters in countries with—in this case rather inappropriately named—most favoured nation status, to a tariff-only regime, which the EU was obliged to introduce by 1 January 2006.
	Under the interim arrangements which applied from 2001 to last year, bananas from the ACP producing countries could be imported free of duty up to a quota limit of 750,000 tonnes each year. Bananas from elsewhere were subject to a tariff rate of E75 per tonne against a quota limit of 2.65 million tonnes; over-quota bananas were subject to higher tariffs—E 680—which were generally prohibitive.
	Last year saw important developments as the EU sought to honour its obligations arising from the 2001 understanding—in other words, to end the MFN quota and move to a tariff-only system. The EU secured a broad negotiating mandate from the Council, such that its aim was to maintain existing levels of protection and preferences for ACP countries, while respecting the Community's obligations and commitments to other trading partners, EU producers and EU consumers. Acting on that negotiating mandate, the EU Commission notified the WTO in January 2005 that it intended to replace its concessionary tariff quotas on MFN bananas with a bound duty of E230 per tonne.
	After limited negotiations, the MFNs invoked arbitration. In August, the arbitrator ruled that the Commission's proposals would not maintain MFN market access. Further attempts at negotiation were fruitless and, in the absence of agreement, the Commission itself invoked a second round of arbitration in late September on a revised proposal for a tariff level of E187 per tonne, together with a duty-free quota for imports from ACP producer countries. Late in October, the arbitrator ruled again that the EU had failed to rectify the matter, thus exhausting the procedures agreed in 2001. We were in uncharted WTO waters, and it then fell to the Community to decide how to meet its tariff-only commitment. Please remember that it had to have a new arrangement in place by 1 January 2006.
	On 29 November last year, under our presidency, the EU agreed—by a narrow qualified majority—a new import tariff of E176 per tonne to apply to imports of bananas from most favoured nation countries. It was also agreed that the new import regime would include a duty free annual import quota of 775,000 tonnes for ACP bananas, also to apply from 1 January.
	Of course, I am well aware that ACP suppliers would have favoured a higher tariff than E176 or even an extension of existing arrangements. However, most favoured nations have equivalent weight on the other end of the rope calling for a lower tariff. Given the EU's obligations in WTO and after two arbitration decisions found against the EU, we believe that this was the best achievable result. Frankly, a result was needed—1 January 2006 loomed.
	Hitherto the ACP quota had been managed through the complex allocation of licences to traditional and non-traditional operators. As we have always imported the largest quantity of ACP bananas into the EU, its operators held the biggest share of the licences. However, as part of last November's agreement to move to a tariff-only regime, the Council of Ministers decided that the licence system for the ACP quota should be changed to provide access on a "first come first served" basis for at least 50 per cent of ACP imports. That change followed lobbying from production and trading interests based in West African and Caribbean countries with a less established history of exporting to the EU, from accession countries and from some longer established member states which favour freer trade mechanisms.
	In February this year, the bananas management committee adopted new rules for quota management. Sixty per cent of the quota will be made available on a "first come first served" basis. The remaining 40 per cent of the quota is still reserved for operators who previously held a licence. Importantly, those operators, mostly in this country, that hold such licences will also be able to take advantage of the "first come first served" share of the quota. Moreover, they should be able to manage their licences in such a way that they can use them at the end of each two-month tranche of "first come first served" to offset the duty which would otherwise be payable. This is an option which is not available to non-traditional operators. I believe that it was a significant concession to the UK on the part of the Commission, as all other member states generally favoured a larger share for "first come first served", or, indeed, wanted to do away with historical licences altogether.
	It is also worth noting that the original proposal would have required UK operators to pay huge securities as deposits for quantities of licences which they stood no chance of obtaining. I do not hide from the fact that we anticipate further pressure for the licences allocated to traders on a historical basis to be further reduced in 2007. But there is still a reasonable prospect that some preference can be maintained for those traders until the ACP waiver expires at the end of 2007 and the new economic partnership agreements are expected to come into effect. Similarly, I do not hide from the fact that high-cost Caribbean producers face threats of competition both from MFN supplies and from cheaper West African bananas. It will be important that they can maintain a critical mass of production of sufficiently high quality to keep supply chains open. We will continue to defend the Caribbean interest as best we can within a World Trade Organisation compatible framework and as part of the EU.
	Assistance through the EU has been mentioned, in particular by the noble Baroness, Lady Byford. As regards the recommendations of the conference that she mentioned, we believe that several very sensible suggestions were made. We had no direct input into that but we hope that the Commission will consider those remarks carefully when looking at what can be done.
	Through the EU we have provided funding to the special framework of assistance—SFA—the European aid instrument to Caribbean banana-exporting countries to help improve their competitiveness, and when that is not possible, to assist with diversification into other economic activities. The implementation performance and release of SFA funds has been disappointing. DfID has been engaging with the Commission in Brussels and in the Caribbean itself to try to improve its performance.
	Through the UK's bilateral aid programme and contributions to multilateral organisations working in the Caribbean region, we are helping to create the conditions necessary to enable job opportunities. In regard to that, my noble friend Lord Foulkes and the noble Baroness, Lady Byford, mentioned the double whammy. It is indeed a double whammy for Jamaica and Belize, but the EU is committed to paying traditional aid for sugar, learning the lessons from the arrangements earlier agreed for bananas.
	The new tariff-only arrangement came into effect in January and the new arrangements for access to the ACP quota only fully from March. Frankly, it is too early to judge the impact on trade volumes and prices in what is a dynamic market, although the Commission is closely monitoring the situation, having accepted the offer that we heard about from the WTO from the good offices of the Norwegian Foreign Minister. This is important and helpful as the governments of several Latin American countries continue actively to oppose the adoption of the new tariff of E176 per tonne on most favoured nations' supplies.
	One cannot rule out further challenges or changes to the new import agreements, but it is key that the European Community can point to the fact that it has met its earlier commitment to introduce a tariff-only system by 2006.
	Turning to the consumer interest, our market will continue to enjoy bananas from a wide range of supplying countries. The discerning shopper can purchase according to label, country of origin, price, size and other factors, such as fair trade and organic, to suit individual tastes and ethical choice. As I am aware from reading the debate in the House in January last, several noble Lords—and we have heard it today—have a strong preference for the smaller, sweeter fruit from the Caribbean. I share their view that the slightly higher price that they command in retail outlets is one well worth paying. As consumers we can all have a big say in the marketplace through exercising choice.
	I shall conclude on the external arrangements. Against the backdrop of earlier disputes, and the Doha understanding reached in 2001, the new arrangements for imports of bananas to the EU was, and is, in the best interests of the UK. Failure to have met our WTO obligation would, first, put the EU in breach of international trade law, and on the back foot of any future negotiations. Secondly, it would place bananas back on the international agenda. Thirdly, it would risk damaging retaliation from trading partners. Lastly, it would risk loss of the very WTO waivers that continue to allow a duty-free preference for ACP exports to the UK and other member states.
	Finally, I shall deal with three points that were raised. First, the noble Baroness, Lady Hooper, in an intervention, asked about research for alternative use of banana by-products. We are sure that producers will look at all alternatives. That would be a legitimate use of transitional assistance, but the EU Commission would have to agree it with the countries concerned.
	The noble Lord, Lord Newby, made a point about arrangements discriminating in favour of French overseas territories. As he well knows, the difference is that those French territories are part of the EU. I should point out that the ACP benefits from a substantial degree of preference still at this time. Thirdly, I commend my noble friend Lord Foulkes—to whom we wish a safe journey tomorrow, while wishing that we could all go with him—on his balanced analysis. I agree that the Commission has worked hard to square the circle.
	We believe that the outcome which was achieved under our presidency at the end of 2005 was the best which could be obtained in what the whole House will understand were, and still remain, difficult circumstances.

House adjourned at twenty-five minutes before seven o'clock.